China’s central bank Governor Zhou Xiaochuan this week urged the IMF to expand the use of Special Drawing Rights, or SDRs, and move toward a “super-sovereign reserve currency.” Bank Negara Malaysia Governor Zeti Akhtar Aziz two days ago said it is “a viable proposal that should be considered,” while Bank of Thailand Governor Tarisa Watanagase said Friday it may benefit developing nations to have an alternative to the dollar.

“It does show that the topic has come up and there seems to be some support here in Asia for it,” said Thomas Harr, a senior currency strategist at Standard Chartered Plc. in Singapore. “Asian central banks have been diversifying out of US dollars for some time and they’re concerned about the sustainability of the US financial system.”

But a Japanese Finance Ministry official said Friday leaders from Group of 20 economies would not discuss the need for a new reserve currency at next week’s summit in London.

No nation sees the need for an alternative to the dollar as the world’s reserve currency, the official told reporters in Tokyo on the condition of anonymity.

In the long term, some nations may wish to debate whether the dollar reserve system would change, though the topic would not be on the agenda at the April 2 meeting, the Japanese official said. The G-20 would talk about how to restore global demand and resolve the financial and economic crises, the official said.

The financial crisis has shown the need for a new international monetary system and creating a global currency should be the main priority as this would prevent “excessive” money printing by any single nation posing a risk to inflation worldwide, Bank of China Ltd. Vice President Wang Yongli wrote Friday in the Financial News. The state-controlled lender is the world’s third-biggest bank by market value and the Chinese-language Financial News is affiliated with the central bank.

US debt sales

The US Treasury will issue US$2.5 trillion in new debt this year as the government boosts spending to help end a recession, Goldman Sachs Group Inc. predicts. China, the biggest foreign buyer of US debt, has about $740 billion of Treasuries and Premier Wen Jiabao this month said he is “worried” about the holdings and wants assurances they will be safe.

The US has blocked expansion of the drawing-rights system over the past 12 years, according to the IMF’s website. SDRs act as a unit of account, reflecting contributions from members, rather than a currency. Their value is based on a basket that includes the dollar, the euro, the yen and the pound. One SDR was recently equivalent to $1.50872, down from $1.54781 at the start of the year, according to data compiled by Bloomberg.

Source: Bloomberg