LONDON (Reuters) - Business minister Vince Cable on Saturday backed China’s call for a new stable global reserve currency in light of the United States losing its AAA long-term credit rating from Standard & Poor’s, but said for the moment the U.S. dollar still remained key.
China, the largest foreign holder of U.S. government debt, has called for the creation of a secured global reserve currency amid concern over Washington’s rising debt burden. On Saturday it roundly condemned the United States, after S&P’s rating downgrade, for its “debt addiction.
“The Chinese have been arguing for a long time that the world monetary system needed reforming and that we need a strong reserve currency, by which I think basically they mean the special drawing rights of the IMF,” Cable told BBC TV.
“This argument’s been around a long time and it would be a sensible way for the world to move but it’s not something we’re going to do overnight.”
Cable has been a vocal critic of the U.S. Congress’s protracted arguments to agree a deficit-cutting deal and had warned that Washington’s triple-A sovereign debt rating was at risk.
“In the short run, the United States dollar is the key international currency and although, frankly, the American legislators made a terrible mess of things a few weeks ago, they have now got back on track, they have undertaken to manage their debt in a prudent way,” he said.
Reporting by Michael Holden; Editing by Susan Fenton