- The Washington Times - Wednesday, June 8, 2005

FRANKFURT, Germany (Agence France-Presse) — The United States and the 12-country eurozone must take the blame for the falling dollar and not try to pass the buck to China and other Asian economies, a top official of the People’s Bank of China said yesterday.

Ma Delun, deputy director of the State Administration of Foreign Exchange, told a conference organized by the International Monetary Fund (IMF) and the Bundesbank that it was up to countries with reserve currencies to keep their bilateral exchange rates stable.

“It is fair to say that since the reserve currency-issuing countries have already enjoyed the privilege and benefit of issuing currencies in credit, they should shoulder the related responsibility of maintaining stable exchange rates among themselves,” Mr. Ma said.

The central banker said it was wrong to expect emerging economies to bear part of the burden of the adjustment of global imbalances.

The U.S. “has been asking some developing countries to shoulder the burden of adjustment of global imbalance. This is quite irrational,” he said.

He also said the United States may have issued more dollars than necessary to support the competitiveness of U.S. exporters, so it was responsible for the accumulation of dollar reserves by Asian central banks.

“In my opinion, the only reasonable answer is that too [many] U.S. dollars may have been issued,” he said.

Many of China’s trading partners think the yuan’s peg to the dollar gives Chinese exports an unfair advantage.

Earlier at the same conference, IMF chief Rodrigo Rato urged Asian economies, and China in particular, to revalue their currencies by letting them float more freely against the dollar.

“There is a need for Asian economies to adopt a more flexible exchange rate regime, for their own good,” Mr. Rato said.

But the IMF’s managing director said such a change would not necessarily lead to any profound economic changes immediately, echoing remarks made by Federal Reserve Chairman Alan Greenspan on Tuesday.

“Let’s not think that a correction in the exchange rate will have a huge impact on growth and savings,” Mr. Rato said.

China has tentatively signaled it was prepared to reform its exchange rate system, but has not given any timetable.

At the IMF conference yesterday, Mr. Ma reiterated that stance.

“We will reform our exchange rate mechanism. We are preparing for reform,” he said.

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