Zhou Says China Wants More Use of IMF's Reserve-Currency Unit

  • G-20 officials plan to disucss IMF SDR at a seminar next week
  • China has long sought to boost international use of the yuan

People’s Bank of China Governor Zhou Xiaochuan said Group of 20 finance chiefs will discuss the International Monetary Fund’s reserve currency as their meetings continue this year, and that Chinese officials want to gradually increase use of the funding tool.

The IMF’s Special Drawing Rights will be one of the topics when G-20 officials hold a seminar next week about the international monetary system, Zhou said in a panel discussion Thursday at the Boao Forum for Asia on the southern island of Hainan, where top government and corporate officials have gathered this week to discuss economic issues facing the region.

China, which hosts the G-20 this year and also will have its currency added to the IMF’s SDR, wants to focus on enhancing use of the reserve-currency basket, which will help manage risk and reduce volatility, Zhou said on a panel with Commerce Minister Gao Hucheng and Foreign Minister Wang Yi. SDR use will increase gradually, said Zhou, the longest-serving G-20 central bank chief.

China’s priorities as it hosts the biggest economies are making the global system more resilient to shocks and, perhaps, less reliant on the U.S. dollar. Officials have set up a working group led by South Korea and France to develop proposals, including on ways to strengthen the role of the IMF reserve-currency unit as it incorporates China’s yuan. China’s leadership has for years sought to strengthen the international use of the yuan, and encourage debate about lessening reliance on the dollar.

Meanwhile, Chinese policy makers are striving to shore up slowing growth and counter yuan depreciation pressure as surging capital outflows burn through foreign-exchange reserves. Zhou has been making public appearances since February following months of silence as officials try to soothe anxiety over the currency in the wake of last year’s devaluation.

“Gradually increasing the credibility and use of a comprehensive basket of currencies will improve everyone’s risk management” and the effectiveness of mutual cooperation, Zhou said.

Premier Li Keqiang said earlier Thursday at the forum that the economy is showing signs of stabilizing even as it undergoes a major transformation that won’t be easy in the near term. Growth slowed to 6.9 percent last year, the slowest in a quarter century.

He said the economy had gotten off to a “good and stable” start in 2016 and flagged that the government’s low debt levels give policy makers the tools to ensure they can achieve growth in the range of 6.5 percent to 7 percent. “We have more policy tools for the Chinese economy to maintain steady and long-term growth,” Li said.

— With assistance by Jeff Kearns, and Gregory Turk

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