China repeats 'super-currency' call
Friday, 26 June 2009 15:55China has renewed its call for the creation of a super-sovereign currency to reduce the US dollar's domination of the world's monetary system.
In its annual financial stability report, China's central bank did not mention the dollar by name but said it was a serious defect that one currency should tower over all others.
'An international monetary system dominated by a single sovereign currency has intensified the concentration of risk and the spread of the crisis,' the People's Bank of China said.
In a veiled call for the US not to erode the value of the dollar through excessively loose monetary and fiscal policies, the PBOC urged closer supervision of those countries that issue the main reserve currencies.
The report dusted off a call by the bank's governor, Zhou Xiaochuan, for the creation of a super-sovereign currency.
In an essay in late March, Zhou caused a stir by suggesting that the Special Drawing Right, the International Monetary Fund's unit of account, could eventually displace the dollar as the principal reserve currency.
Today's report not only advocated a full role for the SDR but said the IMF should be entrusted with managing a portion of its member countries' foreign currency reserves.
Chinese officials have expressed growing concern in recent months that the big US budgetary and monetary stimulus will generate inflation, handing Beijing big losses on its large portfolio of dollar-denominated bonds.
