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Monetary system reform warning

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Monetary system reform warning
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French President Nicolas Sarkozy is warning of the risk of another global economic crisis unless the world’s monetary system is urgently overhauled.

He was speaking at a seminar of the Group of 20 leading economies in Nanjing, China, attended by academics, economists, central bankers and finance ministers.

China is very sensitive on the issue as has been accused of keeping its tightly managed currency undervalued to boost exports.

Chinese Vice-Premier Wang Qishan did not sound enthusiastic in his opening remarks at the one-day gathering. He said: “The reform process will be long-term and complex.”

G20 ministers and central bankers did edge toward a consensus on the need to include China’s yuan in the basket of currencies that makes up the Special Drawing Right, the International Monetary Fund’s in-house money.

Adding China’s currency to the SDR would be a recognition of China’s ever-growing economic clout and would be a concrete step toward making the global monetary order more representative and, ministers hope, more solid.