| MOSCOW, March 19
MOSCOW, March 19 China and other emerging
nations back Russia's call for a discussion on how to replace
the dollar as the world's primary reserve currency, a senior
Russian government source said on Thursday.
Russia has proposed the creation of a new reserve currency,
to be issued by international financial institutions, among
other measures in the text of its proposals to the April G20
summit published last Monday.
Calls for a rethink of the dollar's status as world's sole
benchmark currency come amid concerns about its long-term value
as the U.S. Federal Reserve moved to pump more than a trillion
dollars of new cash into the ailing economy late Wednesday.
Russia met representatives of China, India and Brazil ahead
of the G20 finance ministers meeting last week, as the big
emerging powers seek to up their influence on decisionmaking
globally. Their first ever joint communique did not mention a
new currency but the source said the issue was discussed.
"They (China) did not formally put forward their position
for the G20 summit but unofficially they had distributed their
paper regarding the same ideas (the need for the new currency),"
the source told Reuters, speaking on condition of anonymity.
The source said the Chinese paper envisaged the
International Monetary Fund's Special Drawing Rights (SDRs)
being first assigned a role of a clearing currency on some
transactions and then gradually becoming the main global reserve
"They said that the role of reserve currency should be given
to SDR," the source said.
A U.N. panel of experts is also looking at using expanded
SDRs, originally created by the International Monetary Fund in
1969, but now used mainly as an accounting unit within similar
organisations as a new reserve currency instead of the dollar.
Currency specialist Avinash Persaud, a member of the U.N.
panel, told a Reuters Funds Summit on Wednesday that the
proposal was to create something like the old Ecu, or European
currency unit, that was a hard-traded, weighted basket.
The SDR and the old Ecu are essentially combinations of
currencies, weighted to a constituent's economic clout, which
can be valued against other currencies and against those inside
The Russian source said Moscow was aware that the emergence
of the new global currency would not happen overnight and said
its goal was to initiate a discussion about it at the G20 summit
in London on April 2.
The source said that India did not object to the discussion
but was not prepared to take the lead. The source said South
Korea and South Africa backed the idea, while developed nations
were not "allergic" to it.
"We are not waiting for everyone to say: 'How beautifully it
has all been formulated, let's subscribe to it'," the source
said. "The main idea is to start a discussion about it."
Russia holds about half of its reserves, the world's
third-largest, in dollars, with the rest in euros and pounds.
Prime Minister Vladimir Putin has called on reserve currency
issuers to show more financial discipline.
Finance Minister Alexei Kudrin told reporters on the
sidelines of the G20 finance ministers meeting that it would
take up to 30 years to create a new super-currency, suggesting
there was no unity in Russia on the issue.
President Dmitry Medvedev's top economic aide and G20 sherpa
Arkady Dvorkovich is behind the Kremlin's G20 proposals, made
public one day after Kudrin returned from England.
(Reporting by Gleb Bryanski; editing by Mike Dolan/Patrick