The International Monetary Fund (IMF) should shift its exchange
rate focus from the current yardstick to whether a country's
currency regime fits with its medium-term economic situation, a
Chinese vice-minister said.
"The IMF's exchange-rate monitoring should focus on whether a
member country's exchange-rate regime is consistent with its
medium-term macroeconomic policies, rather than on the level of the
exchange rate," Vice-Minister of Finance Li Yong said at the annual
meeting of the IMF and World Bank on Sunday in Washington.
The issue of yuan revaluation has again been cast into the
spotlight in recent days by Western countries during G7 meetings of
finance ministers and the IMF-World Bank meetings.
But the government said too swift a currency revaluation would
pose a danger to China's economic stability.
"We hope the IMF can fully recognize the diversity of its
members' situations and the limited role the exchange rates play in
macroeconomic management," Wu Xiaoling, deputy governor of the
People's Bank of China, said in a statement to the IMF meeting.
The IMF's bilateral monitoring of members' policies began in
June and is seen as a renewed effort by the Western world to press
for faster appreciation of the yuan.
"It is regrettable that the IMF adopted the decision in June
without a consensus from its members," Li said. "We note that in
recent months it (bilateral monitoring) has given rise to
controversy due to unclear core concepts."
China urges the IMF to "enhance surveillance over countries
issuing major reserve currencies, so as to play an effective role
in promoting financial stability and economic prosperity", Li
said.
Analysts have pointed to the US policy to keep the dollar cheap
and cut its deficit as a source of global economic instability.
China, trying to rebalance its economy by encouraging imports
and cutting exports, has opted to reform its exchange rate policy
in a gradual and controlled manner. Its stance is shared by
Malaysia, which ended its currency's peg to the US dollar on July
21, 2005 - the same day China de-pegged the yuan from the
dollar.
(China Daily October 24, 2007)
