The US has run up budget and external deficits over the years to fuel its consumption spree, thanks to the dollar's status as the reserve currency. But this has also weakened the currency during the process.

Some analysts estimate that the Obama administration's massive bailout plan, with an even higher budget deficit, is likely to further weaken the dollar and give rise to global inflation.

Hwa said the proposals by Zhou and others could help bring about a perfect storm that would reshape the international monetary system in the long run. But it could take years to persuade private companies to use SDRs for international trade and commodity pricing; and opposition from the US is a major obstacle.

"The existing international monetary system is out-of-date," said Wang Jianye, chief economist of the Export-Import Bank of China and former IMF economist. "It does not reflect the profound changes in the world econom and hence is no longer workable."

Wang said the essence of Zhou's article was to "find appropriate mechanisms" to ensure that the US takes into account the global effect of its monetary policy in the short term and help move toward a new global monetary system conducive to sustainable growth in the long run.

(China Daily March 26, 2009)