Mérida, March 30, 2009 (venezuelanalysis.com)– On Sunday the Venezuelan government, represented by finance minister Ali Rodriguez, proclaimed its support for China’s proposal of a new global currency.
The governor of China’s central bank, Zhou Xiaochuan, proposed last Tuesday, the creation of a new international reserve currency which would not be connected to any individual country. The reserve currency is the one used for international trade and stored by governments as part of their foreign exchange reserves.
The new currency would replace the US dollar as the internationally traded currency, given the instability of the US economy.
China argues such an international currency would not be susceptible to the deficiencies inherent in national currencies based on credit and Xiaochuan argues that the current world financial crisis is proof of the inadequacies of the current monetary system, but he acknowledged that the proposal is a long term project.
Last Thursday the Russian government also proposed an international conference around the proposal to create the new world currency and suggested that the International Monetary Fund (IMF) be entrusted with studying the possibility.
Rodriguez made the announcement at an event commemorating the 50th meeting of the Inter-American Development Bank, in Colombia.
“Everything indicates that we are progressing towards a new financial architecture and we are working in that direction.”
Rodriguez said a global currency could be used instead of the dollar to facilitate commercial exchange, such as that between Brazil and Argentina who are using their currencies in mutual transactions, instead of the dollar.
He said the dollar is getting gradually weaker and that these days no one can predict what its value will be at the end of the year.
In January China became the 48th member of the Inter-American Development bank with a contribution of 0.04% to its total capital. It offered to help Latin American countries to confront the world financial crisis through direct investment and the purchase of primary material.