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Home >Expats Living in ShanghaiG20: China Yuan to have a wider role in global finance.
Update：2013-12-10 00:56 Views：
FINANCIAL leaders of the Group of 20 top economies appeared to reach informal agreement yesterday on the need for China's currency to have a wider role in global finance, but not as a substitute for the US dollar.French Finance Minister Christine Lagarde said the day-long meeting agreed the G20 should look at including China's yuan in the currencies used by the International Monetary Fund's SDRs, or Special Drawing Rights - a quasi currency created by the IMF that is used in dealings with and between member governments.
"We raised with our Chinese friends the idea of including the yuan, under conditions and a time frame to be agreed upon," Lagarde said. "From right now we will start work on broadening the basket of currencies."
The basket now includes the US dollar, Japanese yen, euro and British pound.
Since the gathering in the eastern Chinese city of Nanjing was not an official G20 meeting, there was no formal agreement, Lagarde said. She also clarified there was "no suggestion whatsoever that the dollar be replaced by SDRs," an option that has been raised by China as a way of reducing global reliance on the dollar for trade and as a reserve currency.
"There is recognition that the dollar plays a critical role and will continue to do so," Lagarde said.
The G20 financial mandarins also agreed on the need for reforming the IMF to make it more diverse and representative - a long-standing demand from China and other developing nations - and to make it more capable of monitoring trends and helping stave off financial crises.
Closer coordination and "common rules of the game" are needed to prevent currency wars, Lagarde said.
The talks ended without any public statement by Chinese officials attending. They had insisted China's currency policy was not on the agenda before the talks began. Vice Premier Wang Qishan cited the need for only gradual change.
French President Nicolas Sarkozy made an urgent appeal for continued progress on reforming the international monetary system to enhance its stability. "It is clear that we must evolve toward a more flexible exchange rate system that will allow us to withstand shocks," Sarkozy said.
US Treasury Secretary Timothy Geithner agreed that the yuan should to be included in the basket of currencies used for SDRs but with a caveat. "Currencies of large economies heavily used in international trade and financial transactions should become part of the SDR basket," he said. "To achieve this, the concerned countries should have flexible exchange rate systems, independent central banks and permit the free movement of capital flows."
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