Dominique Strauss-Kahn, chief of the International Monetary Fund, urged on Wednesday to expand the role of the special drawing rights an international reserve asset created by IMF to supplement the member countries' official forex reserves by including currencies of the emerging economies, such as the Chinese yuan.
At a forum in Washington, the IMF chief warned of the dangers of an imbalanced global economy coupled with high unemployment and a widening income gap. Cross-border capital flow globally and fluctuation of foreign exchange rates are also threats to financial stability, he said.
Given that, he urged the reform of the international monetary system to avoid another possible crisis. The only way out of the global financial crisis that began in 2008, he stressed, is international policy coordination.
He believes that the special drawing rights could play a more important role in stabilizing the international monetary stability by adding currencies of the emerging economies, such as the RMB, to the special drawing rights basket.
The value of special drawing rights is currently weighted by four currencies: the U.S. dollar, Japanese yen, the euro and the British pound sterling.
The basket is reviewed every five years by the IMF. The latest review was completed in November 2010.
