New global currency looks remote prospect
A report in the Moscow Times that the Kremlin was poised to ask the G20 meeting in London on April 2 to consider creating a supranational reserve currency was met with widespread mirth in the FX market. However, with Zhou Xiaochuan, the governor of the People’s Bank of China, making a similar call just a week later, it seems that the laughing might prove premature.
Zhou has published his arguments in an essay titled Reform the international monetary system on the PBoC’s website. And although he does not specifically mention the dollar, it is clear that he is talking about some of the problems that have arisen as a result of the greenback’s use as the international reserve currency.
"The outbreak of the current crisis and its spillover in the world have confronted us with a long-existing but still unanswered question: What kind of international reserve currency do we need to secure global financial stability and facilitate world economic growth, which was one of the purposes for establishing the IMF?" writes Zhou.
Zhou highlights the problem the US faces in meeting its own domestic goals in the face of other countries’ demand for the dollar.