China's central banker chief Zhou Xiaochuan on Tuesday repeated his call for a new global reserve currency managed by the International Monetary Fund.
Pointing out the dangers of relying on the one national currency without explicitly mentioning the dollar, Zhou insisted that an international reserve currency disconnected from individual nations would be able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.
The acceptance of credit-based national currencies as major international reserve currencies, as is the case in the current system, is a rare special case in history, said Zhou in a statement released on the People's Bank of China website.
The current financial crisis calls for creative reform of the existing international monetary system towards an international reserve currency with a stable value, rule-based issuance and manageable supply, so as to achieve the objective of safeguarding global economic and financial stability.
With leaders from around the world preparing to meet in London next week for the G20 Summit, Zhou said that reform should be guided by a grand vision and begin with specific deliverables that yields win-win results for all.
China, which is the world's biggest holder of dollar assets, has been vocal in its support for a global currency, particularly with the dollar experiencing wild swings over the past few years.
Compared with separate management of reserves by individual countries, the centralized management of part of the global reserve by a trustworthy international institution with a reasonable return to encourage participation will be more effective in deterring speculation and stabilizing financial markets, said Zhou.
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