🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

REFILE-German finmin sees continued global role of dollar

Published 07/06/2009, 01:42 PM

(Refiles to fix spelling in paragraph 12)

By Marcin Grajewski

BRUSSELS, July 6 (Reuters) - The U.S. dollar is likely to keep its role of the global reserve currency, but the Chinese yuan and the euro will slowly gain in significance, German Finance Minister Peer Steinbrueck said on Monday.

"It's not probable that the U.S. dollar will lose its leading role as a currency worldwide," Steinbrueck told reporters ahead of a meeting of euro zone finance ministers.

Chinese officials said in comments published on Monday that the financial crisis has laid bare defects in the dollar-led global economy and the world should look to displace the U.S. currency, even if that will take many years.

Beijing wants the matter discussed at this week's G8 summit in Italy, officials say.

Li Ruogu, chairman of the Export-Import Bank of China, a major state-run bank said the Special Drawing Right (SDR), a unit of account used by the International Monetary Fund, presents a viable alternative to the dollar.

Several other emerging market countries have said they want to reconsider the dollar's role and see a more diversified international monetary system.

Steinbrueck said such views should be studied carefully.

"Some countries are in favour of those (IMF) special drawing rights as another worldwide currency. We have to watch and analyse what other countries are going to favour but I think the dollar will hold its leading role," he said.

He added the Chinese yuan and the euro, the currency shared by 16 out of the European Union's 27 countries, will become increasingly significant, albeit slowly.

"I guess the yuan will gain a more significant role slowly, and the euro too."

The debate is highly sensitive in financial markets, which are wary of risks to U.S. asset values. Bankers reckon China holds perhaps 70 percent of its $1.95 trillion in official currency reserves in the dollar.

European Commission President Jose Manuel Barroso sidestepped the question on a possible replacement of dollar as the reserve currency, saying the world needed a number of stable currencies to provide financial stability.

He said the current debate should not be about whether to back or oppose the dollar as the main reserve currency.

"The most important thing is to have an important number of important stable currencies that give ... stability to the world financial order," Barroso told a news conference.

(Additional reporting by Bate Felix; Editing by Victoria Main)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.