Wednesday, August 23, 2017

7 Zhou Xiaochuan
Governor - People's Bank of China

Zhou Xiaochuan has been Governor of the People's Bank of China since 2002.

An economist, he has been extensively published in international journals, and has overseen the liberalisation of China's financial markets, the most recent development being the liberalisation of the yuan interbank money market in the Hong Kong SAR in 2010.

The Governor has published a personal paper proposing to replace the dollar as the international reserve currency, and presenting his analysis of the financial crisis: http://www.pbc.gov.cn/english//detail.asp?col=6500&ID=182

His argument is essentially based on the Triffin dilemma, which is that of a conflict of interest between the desire for a country to pursue its own domestic monetary policy objectives, and have its currency used as an international reserve currency.

Critics of the Triffin analysis point out however that the dilemma disappears if inflation is kept low, the value of a currency high, so that there are no conflicts long term between domestic monetary policy that is focussed on nominal monetary stability and the role a currency can have as a reserve currency.

Governor Xiaochuan's proposal for the extension of the SDR, and the role of the IMF as a multilateral body has gained support, and arguably has been validated in the novel role for the IMF in resolving the Eurozone's Greek sovereign debt crisis in 2010.