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China hopes for diversification of the international currency system in the future, and it would be "normal" for the issue to be raised for discussion at next week's Group of Eight summit, Vice Foreign Minister He Yafei said on Thursday.
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Speaking at a news briefing ahead of President Hu Jintao attending a G8 summit in Italy next week, He said he was not aware of reports that China had requested a debate about global reserve currencies.
G8 sources told Reuters on Wednesday that Beijing had asked for a debate on proposals for a new global reserve currency at the G8 summit and the issue could be referred to briefly in the summit statement.
The news pushed down the dollar [$$EURUSD
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], which is particularly sensitive to comments from China because bankers estimate the country holds perhaps 70 percent of its $1.95 trillion in official currency reserves in the U.S. currency.
"I have not heard that China has this request," He said in response to a reporter's question about the matter.
But he also flagged that Beijing expected the issue to be discussed at the G8 meeting.
"This financial crisis has fully exposed some shortcomings in the international currency system," He said. "Of course we hope that in the future the international currency system can diversify.
"I think this is an objective that the international community naturally wants to realize, and as I just said, if in the meetings some leader raises this issue for discussion, that would be normal."
China's central bank last week renewed its call for the creation of a super-sovereign reserve currency to reduce the dollar's global domination, which it said had worsened the crisis.
President Hu has yet to make any public statement about the idea for a new reserve currency.
The People's Bank of China caused a stir with its suggestion, first made in March, that the International Monetary Fund's Special Drawing Right (SDR) could eventually displace the dollar as the principal reserve currency.
The SDR is an international reserve asset allocated to IMF members and its exchange rate is determined by a basket of dollars, euros, sterling and yen.
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"At present the U.S. dollar is the main reserve currency," He said. "We of course hope the exchange rate of the main reserve currency maintains stability."
Chinese officials have expressed growing concern in recent months that massive U.S. fiscal and monetary stimulus will generate inflation and drive down the dollar, handing Beijing big losses on its vast portfolio of U.S. bonds.
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