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China urges for financial system restructuring

29 March 2009 08:36 (UTC +04:00)

Baku. Vahab Rzayev - APA-Economics. Chinese Central Bank Governor Zhou Xiaochuan again urged for international financial reform in the face of the global economic crisis, AFP reported.
Speaking at an Inter-American Development Bank meeting in the northwestern Colombian city of Medellin, Zhou said that current fiscal and monetary measures were useless if the international financial system is not overhauled.
He said financial reform and measures for international development banks like the International Monetary Fund (IMF) and the World Bank would likely be discussed at the upcoming G20 summit of developing and industrialized nations on Thursday in London.
"Up to now we have participated in some working groups which focus on coordinating effort to overcome the negative impact of the financial crisis," Zhou said.
"The second (effort) is maybe financial sector reform, including regulatory reform, and I think we also expect there may be some reform agenda for international financial institutions, including the Fund, the Bank and other development banks."
Zhou stressed the importance of savings, saying China’s financial crisis had encouraged savings in Asian countries.
He also called for tougher regulation of international financial institutions. The issue of the world currency reserve is expected to be raised at the G20 summit.
The banking chief this week called for a replacement of the dollar, installed as the reserve currency after World War II, with a different standard run by the IMF.
Zhou suggested the IMF’s Special Drawing Rights, a currency basket comprising dollars, euros, sterling and yen, could serve as a super-sovereign reserve currency, saying it would not be easily influenced by the policies of individual countries.
IMF managing director Dominique Strauss-Kahn welcomed Zhou’s comments and said that talks on a new world reserve currency to replace the US dollar were "legitimate" and could take place "in the coming months."
But US Treasury Secretary Timothy Geithner defended the dollar as a key global reserve currency in Washington.
Chinese Vice-Premier Wang Qishan on Friday stressed the importance of reforming the IMF to give more weight to developing countries, and said this issue must be taken up at the G20 meeting.
Wang also said in an article in The Times that China would contribute more resources to the IMF as part of a wider effort to boost the fund’s lending power.