WB: The dollar will remain the world's dominant reserve currency

PanARMENIAN.Net - The dollar will remain the world's dominant reserve currency and a strong U.S. currency is critical to pull the world out of crisis, World Bank President Robert Zoellick said.



"A dollar-based system and a strong dollar ... will be critical to pull us out of this hole. Over time, however, you will see discussions over the role of the dollar," Zoellick said in an interview with Reuters.



Questions around the dollar's status as the globe's main unit have arisen in recent weeks after China suggested the wider use of Special Drawing Rights (SDR) created by the International Monetary Fund as an international reserve asset.



But Zoellick said it would take more than a Group of 20 summit to establish a new reserve currency, which requires functioning financial markets.



"I think the dollar will remain the principle reserve currency. The question will be whether you have complementary measures," Zoellick said.



"To create a reserve currency you need to have more than a summit or a meeting, you have to create financial markets where people feel comfortable moving in and out of the currency," he added.



Still, Zoellick said expanding the use of the IMF's SDR system is an issue worth considering in a broad sense.



"It is appropriate to discuss the monetary system but one also has to be sensible and not throw out the baby with the bath water," Zoellick said.



The World Bank chief also said the world economy faces a "dangerous year" in terms of downside risks.



"Everyone needs to approach this crisis with a healthy dose of humility because we've seen surprises, we still face high uncertainty," Zoellick added.