World Crisis Online

By CSC staff, Shanghai Governor of the People’s Bank of China Zhou Xiaochuan says he is expecting China’s voting power in the International Monetary Fund to be increased again in 2011.

In his remark at Lujiazui Financial Forum, Mr.Zhou did not supply details on how much more power China expects to wield. In 2006, China’s voting power in IMF increased form about 2% to 3.66%. The US’s vote power is 16.77%, which gives it veto power.
At the London G20 meeting, China announced it would provide $40 billion to IMF.
Also at the meeting, Zhou proposed a trans-national reserve currency to replace the reserve currency based on a sovereign country’s, namely the US dollar. He suggested the Special Drawing Rights (SDR) as a possible candidate. SDR is “paper gold” issued by IMF, based on a bucket of major currencies.
China is also expected to play an important role in making up the new rules of game in the post-financial crisis era. Zhou says the G3 framework, the dominance of the US, Europe and Japan, no longer works. More emerging market economies and developing countries need to be included in shaping the post-financial crisis order.
But, Zhou says, there is no consensus among developing nation decision makers, economists and analysts. “Now that you have louder voices, you need to be clear about what you want. What’s your vision, and what’s your proposal for the direction of the post-financial crisis world?”
“One thing is clear, though. We need a new international financial center, and it is Shanghai.” The issue, of course, is how.