BEIJING Nov 4 Unbridled printing of dollars is
the biggest risk to the global economy, an adviser to the Chinese
central bank said in comments published on Thursday, a day after
the Federal Reserve unveiled a new round of monetary easing.
China must set up a firewall via currency policy and capital
controls to cushion itself from external shocks, Xia Bin said in
a commentary piece in the Financial News, a Chinese-language
newspaper managed by the central bank.
"As long as the world exercises no restraint in issuing
global currencies such as the dollar -- and this is not easy --
then the occurrence of another crisis is inevitable, as quite a
few wise Westerners lament," he said.
As an academic adviser on the central bank's monetary policy
committee, Xia does not have decision-making power but does
provide input to the policy-making process.
The Federal Reserve launched a fresh effort on Wednesday to
support the struggling U.S. economy, committing to buy $600
billion in government bonds despite concerns the programme could
do more harm than good. [ID:nN03163902]
Xia said that it will take a long time for the global
monetary system to improve and that China must be ready to hold
the line on its currency policy and capital controls.
"We must keep a clear mind. We must not lead the world in
financial regulation, nor simply follow the deeds of mature
economies. We must think 'what is good for us'," he said.
China already has a regime of tight capital controls in
place, limiting its vulnerability to the wave of liquidity that
analysts say U.S. easing could push towards emerging markets.
By closely managing the yuan's exchange rate, Beijing has
also been able to blunt appreciation pressure in the face of a
To better coordinate its policies, China should establish a
team in charge of broad economic and financial supervision above
its current network of financial regulators, Xia said.
(Reporting by Langi Chiang and Simon Rabinovitch; Editing by Ken