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UPDATE 1-Medvedev says G8 should make rouble reserve currency

Published 05/16/2009, 08:57 AM
Updated 05/16/2009, 09:00 AM

* Russia wants rouble reserve currency for G8

* Fairer international financial system

* Berlusconi believes worst of financial crisis now over

(Adds Medvedev comments at news conference)

By Denis Dyomkin

BARVIKHA, Russia, May 16 (Reuters) - Russia wants the Group of Eight leading industrial nations to agree to make the rouble a reserve currency and create a new global reserve currency at their July summit, President Dmitry Medvedev said on Saturday.

Medvedev said Russia wanted to set up a fairer world financial architecture to take account of the changes in the global economy and the international financial system since the 1944 Bretton Woods agreement which set up the IMF.

"We are not talking about completely tearing up the Bretton Woods agreements and creating something new in one day but we should think about how the international financial system could be made fairer," Medvedev told a news conference after meeting Italian Prime Minister Silvio Berlusconi.

Berlusconi will host the July G8 summit.

The Russian leader said the current world financial system was built on only one currency, the U.S. dollar and restated the aims Moscow first put forward at the London G20 conference on the global financial crisis in April.

"We should strengthen the system and create a (global) reserve currency and we are not giving up on the aim of giving the rouble the status of a reserve currency," Medvedev added.

Equally, Russia wanted to see agreement on the creation of a supra-national new reserve currency because "we ought to come out of the global financial crisis as winners", he said.

WORST OF CRISIS OVER

Berlusconi said he believed the worst of the global financial crisis was now over.

"I am sure we have overcome the worst moment of the crisis and we will see an improvement in the near future," he told a news conference, speaking through an interpreter.

Moscow and Washington have vowed to "reset" their troubled bilateral relationship, which has been dogged by rows over anti-missile systems, the U.S. war in Iraq, NATO expansion and policy towards Iran.

Medvedev said he was optimistic that U.S President Barack Obama's first visit to Russia in early July would allow the two sides to overcome some of their disagreements and put their relationship on a new level.

"After the change of administration (in Washington), something changed..." he said. "We felt a change in the tone of the dialogue. The most important thing...is the desire and the opportunity to listen to each other's arguments and not just give out recipes (on what to do)".

Medvedev said he would discuss NATO exercises now underway in neighbouring Georgia with Obama at their summit. Russia has heavily criticised the war games in its former Soviet satellite and Medvedev again attacked them on Saturday.

"We cannot but be worried by the NATO exercises in Georgia," he told reporters. "They create tension...I think they add nothing to European security".

Moscow and Rome have close relations and Medvedev thanked Berlusconi for Italy's support of Russia after its brief war with Georgia last August over the rebel region of South Ossetia.

Berlusconi joined Russian Prime Minister Vladimir Putin on Friday to witness the signing of a series of commitments to a flagship Kremlin gas pipeline project in southeastern Europe.

Medvedev praised Friday's agreements with Italy, Bulgaria, Serbia and Greece on the South Stream gas pipeline, which is competing with a rival EU-backed scheme.

Some European governments believe South Stream will increase the continent's dependence on Russian gas and would prefer to see an alternative pipeline, Nabucco, built from the Caspian Sea region via Turkey to Austria, bypassing Russia.

Italy has for some time been one of the Kremlin's favourite business partners and Putin and Berlusconi are close friends. Medvedev said relations with Rome were developing very well and pointed to "progress on practically all fronts". (Reporting by Denis Dyomkin, writing by Michael Stott)

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