Loose money in US big risk to world economy
Source: Agencies |
November 5, 2010, Friday
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Print Edition
Print Edition
UNBRIDLED printing of dollars is the biggest risk to the global economy, an adviser to the Chinese central bank said in comments published yesterday, a day after the United States Federal Reserve unveiled a new round of monetary easing.
China must set up a firewall via currency policy and capital controls to cushion itself from external shocks, Xia Bin said in a commentary piece in the Financial News, a Chinese-language newspaper managed by the central bank.
"As long as the world exercises no restraint in issuing global currencies such as the dollar - and this is not easy - then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament," he said.
Li Daokui, another academic adviser to the central bank, said loose money in the US would translate into more pressure on the yuan to rise.
"A certain amount of capital will flow into the Chinese mainland, either through Hong Kong or directly into the mainland," Li said.
But he added that China would stick to its own gradual pace in managing the yuan's rise. He also said that big gains in US midterm elections by Republicans, who are more friendly to free trade, had made him "a bit relieved" because political calls for China to let the yuan rise would likely quieten down.
The Fed committed to buy US$600 billion in government bonds despite concerns the program could do more harm than good.
China must set up a firewall via currency policy and capital controls to cushion itself from external shocks, Xia Bin said in a commentary piece in the Financial News, a Chinese-language newspaper managed by the central bank.
"As long as the world exercises no restraint in issuing global currencies such as the dollar - and this is not easy - then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament," he said.
Li Daokui, another academic adviser to the central bank, said loose money in the US would translate into more pressure on the yuan to rise.
"A certain amount of capital will flow into the Chinese mainland, either through Hong Kong or directly into the mainland," Li said.
But he added that China would stick to its own gradual pace in managing the yuan's rise. He also said that big gains in US midterm elections by Republicans, who are more friendly to free trade, had made him "a bit relieved" because political calls for China to let the yuan rise would likely quieten down.
The Fed committed to buy US$600 billion in government bonds despite concerns the program could do more harm than good.
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