Money

Asian nations called to cross hold currencies

(Xinhua)
Updated: 2011-05-28 15:08

BEIJING - Asian nations should promote cross-holding of their currencies and trim reliance on currencies of certain nations to push forward reform on the international monetary system, said Fan Gang, a former adviser to China's central bank, on Saturday.

Nations should work to diversify holdings of currencies to make the global financial market safer and tackle the various crisis in terms of the international monetary system, Fan said at a forum in Shanghai.

Related readings:  Official promotes yuan in place of reserve currencies  China ready to join Europe on global FX reforms  RMB to become a major global settlement currency in 5 yrs: HSBC  Currencies on the rise in Asia

Diversifying holdings of foreign exchange reserves is a more reasonable option in comparison with special drawing rights (SDRs), which, he said, were not fully used in the past decades and were more like a mechanism responsive to crisis rather than a routine one.

Including more currencies in forex reserves will reduce dependence on currencies of certain nations and on creditor's rights of certain governments, he said.

He suggested Asian countries should normalize currency cross holding based on the current currency swaps. They can hold sovereign bonds of other nations according to their trade volume, he said.

It will make the nations more concerned about risks in other economies and promote coordination and cooperation in macroeconomic polices, he said.

Some nations in east Asia have expressed a willingness to hold renminbi bonds, he said, but did not specify.