China could help restore int'l monetary system: Mundell (2)

He called for fixing the dollar-euro exchange rate, saying that as for China, the stabilization of the dollar-euro exchange rate would help China avoid the large problems that arise from instability with other currency areas, particularly the euro area.

Mundell, who won the Nobel Prize in 1999 for research which helped lay the foundation for Europe's single currency, said China could be made a part of the stabilization if it moved toward a convertible currency and cooperated in the adjustment mechanism.

He added that if the yuan were made convertible, a new and larger monetary area could be created side by side with the dollar and euro. This would require a collective monetary policy based on monetary stability of the Dollar-Euro-Yuan (DEY) Area.

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