Stiglitz: Time for China to play stronger role in global financial reform

16:20, July 05, 2011      

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The timing is right for China to play a stronger role in reforming the global financial order, and there should be a "global reserve currency" with China as a part of the basket, said Joseph Stiglitz on Tuesday in Beijing, in an exclusive interview with Xinhua.

"It is important for China to play a much more important role in the global economy to serve both China and the world," said Stiglitz, a Nobel Laureate in Economic Sciences and a professor at Columbia University.

He made the remarks at the 16th World Congress of the International Economic Association (IEA) held at Tsinghua University -- where world renowned economists gathered for the five-day congress.

Stiglitz said the rules of the global economy are directed by developed countries, with a great deal of influence exerted by the large financial institutions within these countries, which don't benefit the United States or the world.

Furthermore, he added, the free market ideology dominates within the United States and has a disproportionate role in its policies.

"China has been both more pragmatic and balanced. Given China' s increasing role in the global economy, it's time for China' s voice to be more strongly heard," he said. "China brings a different view to the table of global debate."

Stiglitz said some U.S.' policies have really hurt the poor, as the government allowed banks to engage in excessive risk taking and predatory (exploitive) lending.

He believes China should prompt discussions on how global institutions such as influential banks should reform and play appropriate roles in the global economy.

China has one third of the global reserves, so China should have some say over what the global reserve system should look like, he said.

"The current system, where a single currency dominates as a reserve, is an anachronism in the twenty-first century," Stiglitz said, adding that a reformed system could enhance global stability, strengthen global growth and be more equitable.

"China' s RMB should be a part of any global composite reserve currency, such as the special drawing rights (SDR)," he noted.

Source: Xinhua
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