"Please listen to the voices of developing countries!" these words have been delivered by media to everyone who is concerned about world economy amid the Group of 20 (G20) summit held in London on Thursday.
As the economic crunch spreading, developing countries firmly voiced their demands to reform global monetary system, eliminate trade protectionism and increase voting rights in international finance institutions.
The United States and other countries in the Europe Union dominate most world organizations including the International Monetary Fund (IMF) and the World Bank, as they grasp a large part of voting rights.
In the IMF, the U.S. has 17 percent of the voting rights, but massive developing countries in Asia, Africa and Latin America have a total of 42 percent. For China, the world third largest economy in term of gross domestic production, has only 3.72 percent of the voting rights.
Developing countries hope to play a more positive and active role in international institutions. Currently, they have to accept the decisions made by developed countries -- no matter whether it is constructive or prejudiced.
Chinese President Hu Jintao said on March 31 in an interview with Xinhua that "the international financial system should undergo necessary reforms in an all-round, balanced, gradual and effective manner to prevent a similar crisis in the future."
It has been a common view that the international community should abandon prejudice and enhance cooperation, as the world economy has entered a most difficult time in decades.
According to the 2009 world economy outlook released by the World Bank on March 31, world gross domestic production is expected to decline 1.7 percent in 2009, the first fall since World War II. Economic growth in developed economies, the worst-stricken market, will decline 2.9 percent.
It is natural to discuss a new global monetary system in the wake of the devastating financial crisis. Zhou Xiaochuan, China's central bank governor, said in an article published in March that a new super-sovereign reserve currency should replace the greenback as the backbone of the global monetary system.
This suggestion has been echoed by several countries including Russia, Brazil, India and South Africa. John Lipsky, IMF first deputy managing director, called the idea of a new global reserve currency a "serious proposal."
Its time to reform international monetary system.
The U.S. dollar, which served as an international reserve currency, should be supervised strictly by the IMF, because fluctuation and devaluation will bring huge risks to other countries. However, the monitoring is so weak that it has already sparked other countries' worries.
Even worse, the U.S. Federal Reserve Board earlier this month said it would buy 300 billion U.S. dollars in treasury bonds and 750 billion U.S. dollars in mortgage securities over the next six months. This move will no doubt lead to acceleration in the United States' money supply and result in inflationary recession.
Expert Zhuang Jian from Asia Development Bank said, although it is not realistic for other currencies to replace the U.S. dollars in the near future, emerging markets can still make some attempts to make their own currency more international.
On Thursday, China signed a contract with Argentina to exchange 70 billion yuan, (10.24 billion U.S. dollars) in their respective currencies for use in trade and investment, so that there is no need for each other's companies to buy dollars to pay for transactions. This move has been treated as a step to reduce reliance on the dollar.
On one hand, developing countries are growing fast and are seeking a way to pursue their rights; on the other hand, existing world financial system has restricted their rights, which hinders development of their economies.
The economic crunch is not only a disaster for the world economy, it is also an opportunity for countries to cooperate and reform global financial system. The international community should not miss the opportunity.
(Xinhua News Agency April 2, 2009)
