Former ECB chief says China's RMB has bright future as global currency
BEIJING, June 26 -- China's currency, the renminbi, would play an increasingly important role in the international monetary system as the Chinese economy continued to grow rapidly, said Jean-Claude Trichet, former president of the European Central Bank (ECB).
"The RMB has a very bright future as a global currency," Trichet told Xinhua in a recent interview in Beijing, where he attended the International Financial Forum (IFF) 2014 Leadership Dialogue.
China was considered not only a remarkable economic success, but also a monetary success, he said.
"China's development is absolutely fantastic!" he said when recalling his first visit to China in 1982.
Trichet, also co-chairman of the IFF, a Beijing-based non-profit international organization, said he had witnessed great changes in China over the past 32 years, adding the growth of the world's second largest economy had changed the entire world.
He disagreed with current pessimistic forecasts of China's growth rate in 2014, saying it was normal for growth to ease slightly in such a large economy with such a long rapid growth period.
Aiming at sustainable development, the Chinese government has a 7.5-percent growth goal this year.
"I would say that 7.5 percent growth is a dream for other major economies," Trichet said, adding the goal was reasonable for China.
As a long-time observer of China's economic and financial reform, the former ECB chief said he noticed the RMB's pace of internationalization had been accelerated.
China decided to set up an RMB offshore settlement bank in London earlier this month after announcing the establishment of an RMB offshore trading center in Frankfurt, Germany several months ago.
Trichet, however, said the RMB had to be completely convertible so savers and investors in the world could have full confidence in it as a free-floating global currency.
As for the international monetary system, he said the current system was far from perfect, but it remained "reasonably resilient."
Thanks to smooth global cooperation among major economies' central banks, there was no dramatic crisis on the exchange market during the worst financial crisis of advanced economies since World War II, Trichet said.
Asked about the recent economic situation in Europe, he said the euro zone was recovering gradually.
"We're not at the epicenter of the global crisis now," the euro defender said, adding there was still a lot of work to be done.
Responding to the concern about the ECB's recent decision to launch a negative interest rate policy, Trichet said it meant the central bank was taking serious measures to tackle low inflation in the area.
He also defended himself over his policy when he was in office from 2003 to 2011, during which he was criticized for emphasizing price stability over growth and job creation.
"Price stability, without inflation and without deflation, is not opposed to growth and job creation, but on the contrary, it is a precondition of growth and job creation," he said.
Trichet said 2 percent was the definition of price stability, which was set at the very beginning of the euro.
Over the past 15 years, "the average yearly inflation rate was exactly 2 percent of the euro," he said.