China should ensure the stability of its currency to help avoid
falling into financial crises, even though the country has
undergone stable and fast growth in the past five years, says the
central bank governor.
"Developing countries should boost confidence in the local
currency, market and central bank to prevent and handle financial
crises," according to a transcript of Zhou Xiaochuan's comments on
the People's Bank of China Website yesterday.
These countries are required to maintain stable currencies,
adopt flexible exchange rates, ensure confidence in currency
convertibility and enhance the economy's adaptability to all kinds
of shocks, according to Zhou's comments at a recent Beijing
forum.
The yuan has climbed more than 10 percent against the dollar
since a peg was scrapped in July 2005.
Zhou said in an earlier report that China is committed to
advancing currency reform and reforming its financial sector "step
by step," but it has not set a timetable for the full
convertibility of the yuan.
Zhou said in the forum that the country should learn from past
mistakes and crises.
It's normal that financial crises happened every several years,
and the key is to "learn new things from each crisis to improve the
system," Zhou said.
Emerging markets can learn from other economies as many
developed countries have experienced similar problems, Zhou
said.
"The central bank should strengthen analysis to prevent
potential risks and prepare preemptive plans," Zhou said.
He also cited other cases including this year's US subprime
mortgage crisis.
(Shanghai Daily December 6, 2007)
