China: No Dethroning Dollar Despite Risks
Wednesday, May 27, 2009 9:29 AM
BEIJING -- The global financial crisis has tarnished the dollar and will prompt reserve managers to diversify, but the U.S. currency will retain its dominant international role, a senior Chinese official said in remarks published on Wednesday.
Guan Tao from the State Administration of Foreign Exchange, which invests China's $1.95 trillion in currency reserves, likened the risk of U.S. inflation and dollar depreciation to "blocked dams" that threatened the stability of the global monetary system in the medium term.
The phrase, 'My dollar, your problem' vividly captures the capacity of the United States to exploit the current international monetary system to palm off this crisis," he said.
But Guan said diversification brought the risk of greater turbulence in non-dollar currencies.
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