蒙古时装走秀背景音乐:China urges exchange rate stability, US self discipline

China urges exchange rate stability, US self discipline

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2011-3-5 10:35

China warned against exchange rate volatility Friday and, in an implicit swipe at the United States, urged "self-discipline" from countries issuing reserve currencies such as the dollar.


Speaking at a seminar for central bankers in Paris, the deputy governor of the People's Bank of China, Xiaolian Hu, repeated China's call for a broader range of currencies to be traded in order to stabilise markets.


"Highly volatile exchange rates of economic reserve currencies sometimes cause unnecessary disruption to the real economy," she said, in remarks to a symposium of around 100 bankers and policy experts.


"Under the current international monetary system, issuers of major reserve currencies need to exercise some self-discipline," she said.


"At the same time there is a need to put in place a set of rules of international control to guide the adoption of appropriate policies."


The United States and others have been pushing China to allow its currency to appreciate, arguing its low level unfairly favours its own exporters and creates dangerous global trade imbalances.


In Paris, Hu countered that free-floating exchange rates themselves contribute to instability by swinging wildly -- and causing sharp changes in commodity prices -- without any reference to underlying economic reality.


"For example," she said. "The exchange rate between the euro and the dollar fluctuated in a range of between 0.8 and 1.6 in a few years, while there was no corresponding change in the economic fundamentals of Europe and the US."


China therefore would like to see a more stable system of exchange rates and more currencies represented in the SDR or "Special Drawing Rights" -- the International Monetary Fund's basket of reserve currencies.


"Diversification of reserve countries comes as a result of market forces. Other countries may also emerge in the future if they are widely accepted in the market," Hu suggested, noting that the euro had quickly gained approval. "The role of the SDR as a reserve currency has been widely discussed after the financial crisis," she noted, cautiously.


"It is super-sovereign and its supply is manageable. It could reduce the volatility of prices compared to a single currency. It has the potential to play a role as an international reserve asset," she added.


But she warned that there was much work to be done to reform the way the SDR system was managed, to "reflect the reality of the global economy."


Last month, the IMF managing director Dominique Strauss-Khan suggested the SDR basket could be expanded beyond the dollar, the euro, the pound and the yen to include emerging currencies such as China's renminbi.


AFP