MercoPress. South Atlantic News Agency

“Absolutely legitimate” to discuss a new world currency

International Monetary Fund Managing Director Dominique Strauss-Kahn said on Wednesday a discussion over China’s call for a new world currency is “absolutely legitimate” and is likely to take place in the coming months.

“It is legitimate to discuss the role of reserve currencies in the world” but the US dollar is likely to keep hold of its position, said Strauss-Kahn adding that discussions on a new currency would likely take some time and he preferred to focus on fixing the economic crisis.

Zhou Xiaochuan, China's central bank governor, earlier this month said the world should consider basing the IMF Special Drawing Rights as a super-sovereign reserve currency.

Special Drawing Rights are based on an IMF-created global currency basket comprising the dollar, euro, sterling and yen.

“There is no reason to believe it can move rapidly. It is an interesting point but I am more focussed today on the way out of the crisis and the way to solve the crisis than on the system itself,” he added

Asked whether the dollar's days as a reserve currency were finished he underlined “I don't believe this. The Chinese don't believe this”.

Earlier on Wednesday, US Treasury Secretary Timothy Geithner said the US dollar was still the world's reserve currency and would remain so for a long time.

Strauss-Kahn stressed the importance of resolving the economic crisis. He cautioned an economic recovery was not guaranteed to happen in 2010 and that 2009 would be ”tough“.

”My fear is we are not moving fast enough with the cleaning up of the financial sector. Economies today need...companies to be financed and people to be able to buy houses“ he said.

”It is not certain there will be a pickup in 2010”, he emphasized.