China: Replace dollar as reserve currency

China has expressed unhappiness with the US role in the world economy calling for the creation of a new currency to replace the dollar.

"A super-sovereign reserve currency not only eliminates the inherent risks of credit-based sovereign currency, but also makes it possible to manage global liquidity," Zhou Xiaochuan, the governor of the People's Bank of China said in a speech posted on the bank's website. 

Zhou argued for reducing the dominance of a few individual currencies, such as the dollar, euro and yen, in international trade and finance. 

He also advocated a 'gradual process' of reform of international currency reserves under the International Monetary Fund (IMF). 

Chinese officials are concerned about Beijing's significant holdings of US government bonds. Premier Wen Jiabao this month publicly expressed "worries" over the matter. 

China is believed to hold some 1 trillion dollars in US government debt and Beijing government is therefore concerned with the safety and profitability of US government bonds. 

Xiaochuan's comments come one week before the G20 group of major economies is scheduled to meet to discuss the financial crisis. 

The proposal follows a similar one Russia made this month during preparations for the G20 meeting. 

John Lipsky, the IMF's deputy managing director, said the Chinese proposal should be treated seriously. However, a spokeswoman for the US Treasury Department declined to comment on Zhou's views.