Major nations urged to back dollar as key currency
Posted on » Saturday, July 04, 2009
Posted on » Saturday, July 04, 2009
| TOKYO: Major countries should support the dollar as the key international currency, although emerging nations may discuss a new global reserve currency on the sidelines of the Group of Eight (G8) summit next week, a Japanese official said yesterday. China has asked for debate on a new global reserve currency when G8 leaders meet the G5 emerging economies next week in Italy, G8 sources said. But Japan thinks it would be difficult for another currency to replace the dollar as the world's reserve currency and it is against any move that would unnecessarily weaken the status of the dollar, said Yoichi Suzuki, director-general of the Japanese foreign ministry's economic affairs bureau. "Japan's stance is that major countries should support the dollar," Suzuki, one of the country's main co-ordinators for the G8 summit, said. "It won't benefit any country to talk about ideas for a new global key currency, which would weaken the dollar," said Suzuki. An idea, which China's central bank has floated, that the International Monetary Fund's Special Drawing Right could eventually displace the dollar as the main reserve currency was unrealistic, he added. Japan is interested in a stable dollar for its trade with other countries and because most of its $1 trillion foreign reserves, the world's second largest, are in dollar assets. Suzuki said he would not be surprised if the G5 discussed the role of the dollar when they meet on the sidelines of the G8 summit in L'Aquila. On Thursday, Chinese Deputy Foreign Minister He Yafei said it would be "normal" if diversification of the currency system were discussed at the summit. But Suzuki played down the idea, saying Tokyo does not expect the topic to be discussed at the meeting of G8 plus G5 emerging nations, including China, Brazil and India. Talks at the July 8-10 summit are expected to focus on the state of the world economy, financial regulation, climate change and trade and development. Tokyo will propose establishing principles and citing best practice to promote responsible investment in agriculture. |