Friday, June 26, 2009

The Bank of China Has Elevated Zhou Xiaochuan's Call for International Monetary Reform

Mr. Zhou Xiaochuan, is the People's Bank of China's Governor and Chairman of the Monetary Policy Committee. He published a paper on March 23, 2009 calling for increased use of the SDR as a reserve currency. Read Governor Zhou Xiaochuan's call to "Reform the International Monetary System" on the Bank's web site.

Robert Flint in the Wall Street Journal tells us, "In its 2009 financial-stability report on Friday, the People's Bank of China elevated the status of earlier suggestions for a new international currency. The ideas put forward in March in an essay by central bank governor Zhou Xiaochuan have now become part of the official view.

"The report is essentially a reiteration of the call in Mr. Zhou's essay for expanded use of Special Drawing Rights, a basket of currencies used by the International Monetary Fund. There is nothing in the stability report that hasn't been stated before.

"The central bank took a big step when it published Mr. Zhou's essay in English on its Web site in March. But to make his views a central-bank-backed position puts more authority behind the call for a new reserve currency.

"The central bank is an arm of the Chinese government and ultimately answers to the State Council, the country's highest governing body."

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