China's central bank chief Zhou Xiaochuan has given the G20 something to think about as they prepare to meet in London this week for the annual gathering of the leaders of the world's largest economies. However, the debate around moving away from the U.S. dollar to a new world currency, as Zhou suggested, may not be feasible at this time, according to a Reuters report.
Beijing, Russia and other emerging economies have been emboldened by the economic crisis and are beginning to call for a shift away from the dollar-dominated world economy. Their timing is both good and bad, suggests the article, since it comes amidst one of the greatest recessions in decades, but further discussion of moving away from the dollar could cause more instability in the already nervous financial markets, a reason the G20 may stay away from the debate at this time.
According to the article, an aide to French president Nicolas Sarkozy said the topic of using a new reserve currency likely will not be discussed at the summit since its main goal is to reassure shaky world financial markets.
Still, the report goes on to say that there are some economists who think the idea has merit. In addition, Reuters references a UN report from last week that said an alternative reserve currency system based on the SDR, a unit of account used by the International Monetary Fund, could help contribute to global financial stability and strength.