China calls for close monitoring of reserve currencies

Chinese prime minister Wen Jiabao has called for a close monitoring of the economic polices of countries with the global reserve currencies as part of building a diversified international monetary system.

Making an oblique reference to the US currency and the US administration's money management policy, Wen also pledged to promote more international use of the Chinese yuan.

Wen had expressed concern in recent months about the safety of Chinese investments in US dollar assets.

Wen and People's Bank of China (PBOC) governor Zhou Xiaochuan also said the International Monetary Fund (IMF) has failed to warn or diagnose, let alone offer remedies, when problems occurred in developed countries.

IMF needs improvement in this respect, he said at a panel discussion during the Boao Forum for Asia (BFA) annual conference. He also cautioned against jumping to the conclusion that the Chinese economy is already on the path of recovery.

"We should strengthen the supervision of the economic policies of the main reserve currency economies and push forward the establishment of a diversified international monetary system," he said in his opening address to the BFA, held annually in the Chinese island province of Hainan.

China had made a similar appeal at the London G20 summit earlier this month for the International Monetary Fund to strengthen its oversight of reserve currency economies.

Chinese central bank chief Zhou also had suggested the idea of reducing reliance on the US dollar as the global unit by developing the IMF's Special Drawing Rights (SDRs).

At the London G20 forum, however, China did not insist on a discussion of the subject.