OECD's Gurria suggests greater role for the yuan
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The head of the Organisation for Economic Co-operation and Development (OECD) has "warmly welcomed" moves to internationalize the Chinese currency.
However, Jose Angel Gurria has also ruled out the possibility that the appreciation of the renminbi, also known as the yuan, will reduce the trade imbalance between China and the United States.
"Quicker internationalization of the renminbi could be China's contribution to rebuilding the global monetary order," said Gurria, the secretary-general of the Paris-based organization, in an exclusive interview with China Daily.
Gurria sent out the message ahead of the forthcoming G20 meeting of finance ministers and central bank governors, which will take place on Friday and Saturday, at which China's role in reshaping the global financial order will be a prime topic of discussion.
He said the Chinese economy is expanding rapidly and, in terms of market-exchange rates, it is now the second-largest in the world. "As such, it is natural that countries will want the renminbi to figure in their reserves," said Gurria, who presides over the 34-member organization, which is an umbrella group of the wealthiest industrialized countries.
In terms of reforming the world monetary order, he said China's role could be to extend the internationalization of the currency. However, at present, total holdings of the currency outside China are extremely small compared with the official foreign-exchange holdings of dollars or euros, or when compared with private holdings of those currencies.
Meanwhile, the renminbi is not convertible for capital transactions, and Gurria said the Chinese authorities could make a major contribution to a new global architecture by substantially increasing the internationalization of the currency.
The Paris meeting is doubly significant as France holds the presidency of both the G8 and G20 this year. France has also been campaigning for a more broad-based currency arrangement and is pressing for a reduction of the financial world's excessive reliance on the US dollar.
French President Nicolas Sarkozy has called for better regulation of international capital flows and urged a further strengthening of the Special Drawing Rights (SDR), issued by the International Monetary Fund (IMF), by the addition of the Chinese currency.
The SDR is an international reserve asset, created by the IMF to supplement the official reserves of its member countries.
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