Former Chinese central bank advisor Yu Yongding on June 25 urged reform of international financial and monetary systems.
He said it was a "process" the world needs to start now. "One of the fundamental causes of why we are now facing a severe crisis is that the U.S. dollar, a national currency, now serves as the most important international reserve currency. This should be changed," Yu said in an interview with Xinhua at the U.N. headquarters in New York.
He said U.S. domestic policies have tremendous impact on other countries because of the dollar's status as a global reserve currency.
"For example, as part of its crisis management, the United States has adopted a very expansionary monetary and fiscal policy," Yu said, "What would be the consequences of this extremely expansionary monetary policy? When the economic situation turns around, will the Federal Reserve be able to withdraw liquidity in a timely fashion so that in the middle or long term there will be no inflation?"
He said another concern is that the U.S. economy is going to raise some 3.8 trillion U.S. dollars in debt in the next five years.
An increase in the U.S. national debt and balance sheet of the Federal Reserve has led to concerns in some quarters about the stability of the dollar as a store of value, he said.
