China calls for new global currency

China's central bank is calling for the US dollar to be replaced as the global reserve currency.

The People's Bank of China governor, Zhou Xiaochuan, wants the International Monetary Fund (IMF) to create a new currency to replace the dollar due to its volatility.

China holds the largest currency reserves in the world at around $2trn and is the biggest holder of dollars.

China has often complained about the volatility of the currency, and is particularly concerned about the US bailout plans eroding its assets. Xiaochuan believes it is dangerous for the world to rely on a single currency.

"The outbreak of the crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system," he says.

Xiaochuan wants the IMF to use its Special Drawing Right (SDR), a unit of account created in the 1960s, as the world's main currency in future, believing it to be a more stable alternative to the US dollar.

The issue of the global reserve currency is likely to be raised by the Chinese at next month's G20 summit in London, which takes place on 2 April.

Contact: John Bakie, Tel: 020 7484 9805, e-mail: John.Bakie@incisivemedia.com