From the second half of 2008, a financial storm that originated in the United States swept across the world. The root cause of this crisis was the US' long-term abuse of sovereign credit, the misuse of its status as a global major reserve currency issuing country and the promotion of twin deficits in its current account and the fiscal budget. The situation was further aggravated by the maintenance of US citizens' excessive consumption and the US government's over spending.

Any chance of preventing a financial crisis was lost when US credit rating agencies covered up the sovereign credit risk, reversed the risk relationship between debtor countries and creditor countries, and attracted international capital to high-risk regions.

Now that the origins of the financial crisis have been identified, we should develop a strategy to prevent such a crisis from happening again, and build a more efficient and safer global financial system. This is a key responsibility for the governments of the world.

The priority is to establish a multi-currency international monetary system, an international reserve currency monitoring and early warning system, and an international financial risk relief mechanism.

Establishing a multi-currency international reserve currency system is a fundamental way to maintain the stability of the international financial system. Such a global multi-currency reserve system could include the US dollar, the euro, yuan, yen, pound sterling and other currencies.

There are competition, checks and balances, and intermediation among currencies. A multi-currency system would encourage international reserve currency issuing countries' governments to adopt a prudent monetary policy to keep their currencies stable and maintain their sovereign credit.

Only by establishing such an international reserve currency system, can the international financial system overcome its over-reliance on a single sovereign currency and avoid excessive exposure to the risks of one currency.

With the collapse of the Bretton Woods System in the 1970s, international currencies decoupled from gold. The US dollar, which was based on the US' sovereign credit, became the major reserve currency. This allowed the US to transfer debt to foreign countries through currency depreciation. From 1971 to 2010, the US dollar depreciated 97.2 percent against gold, causing huge losses to countries holding US dollars.