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President Hu: US Monetary Policy Has a Major Impact on Global Liquidity, Capital Flows

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Chinese President Hu Jintao said Monday that the monetary policy of the United States has a major impact on global liquidity and capital flows.

Hu made the remarks in an written interview with reporters from Wall Street Journal and Washington Post before his upcoming state visit to the United States, due to start Tuesday.

"Therefore, the liquidity of the US dollar should be kept at a reasonable and stable level," Hu said.

According to Hu, the current international currency system is the product of the past. As a major reserve currency, the US dollar is used in considerable amount of global trade in commodities as well as in most of the investment and financial transactions.

"It takes a long time for a country's currency to be widely accepted in the world," he pointed out.

China has made an important contribution to the world economy in terms of total economic output and trade, and the Chinese currency, the Renminbi(RMB), has played a role in the world economic development, he said.

"But making the RMB into an international currency will be a fairly long process," he added.

"The on-going pilot programs for RMB settlement of cross-border trade and investment transactions are a concrete step that China has taken to respond to the international financial crisis, with the purpose of promoting trade and investment facilitation," he said.

"They fit in well with market demand as evidenced by the rapidly expanding scale of these transactions," he said.

(Xinhua News Agency January 17, 2011)

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