IMF managing director Dominique Strauss-Kahn notified the fund’s executive board of his intention to appoint Zhu Min, currently deputy governor of the People’s Bank of China, as his special advisor, a fund statement said.

Zhu, who joined the Chinese central bank in 2009 after more than a decade as a senior executive of the Bank of China, is expected to assume his position on May 3, the Washington-based fund said in a statement.

It is the highest ever IMF staff position to be held by a Chinese citizen.

The impending appointment follows growing clamor from China and other emerging nations for a bigger say in the running of the IMF and World Bank, the twin Bretton Woods institutions.

It has long been speculated that Zhu, who holds an economics doctorate from Johns Hopkins University and who was an economist at the World Bank from 1991 to 1996, would be appointed to a high-level post in the IMF.

Source : Konaxis

Zhu Min – who would first take up a position at the People’s Bank of China, the central bank – would be the first Chinese national to hold a major post within the Washington-based fund, said the newspaper.

China and other emerging countries have pressed the IMF to reform its governance structure to better reflect their growing global economic clout.

Zhu, a veteran in China’s banking industry and a former economist with the World Bank, is considered a strong candidate to represent China’s interests within the IMF, the newspaper said, citing unnamed sources.

The report did not say when he could take up the IMF post.

A spokesman at Bank of China declined to comment on the report.

Source : Konaxis

The G-20 has agreed in principle but could face an obstacle: European governments, which hold a big share of the IMF board seats and are reluctant to accept changes that might reduce their own status in the IMF.

By tradition the IMF boss is a European, while an American leads its sister institution, the World Bank.

Increasing developing countries’ voting power might require cutting the number of European seats or creating joint European Union seats.

Britain, Germany and France are confident they can retain a leading role. But midsize nations such as the Netherlands, with just 20 million people, and Spain worry about their status.

Source : Konaxis

“We are grateful to the Chinese authorities for signaling their intention to invest in IMF notes and thereby, helping the IMF membership weather this global economic and financial crisis,” IMF Managing Director Dominique Strauss-Kahn said in a statement.

China’s State Administration of Foreign Exchange said that China is willing to purchase the bonds issued by the IMF, since both the yield and risks are reasonable.

“With this announcement, the Chinese authorities have signaled strong support for the international economic and financial system,” Strauss-Kahn said. “This decision will be beneficial to all.”

IMF members’ investment will boost the Fund’s capacity to help member countries, particularly developing and emerging market nations, cope with the crisis and thus benefit all members by facilitating an early recovery of the global economy.

The new notes, meanwhile, will offer members a safe investment instrument with reasonable return, according to the IMF.

“IMF staff will present the necessary documentation to the Fund’s Executive Board to allow the issuance of notes as early as possible,” Strauss-Kahn said.

The 185-nation IMF is currently struggling to provide needy countries with financing for them to survive the global financial and economic crisis.

The IMF is due to issue its very first bonds, and major developing economies such as Brazil, Russia, India and China — known collectively as the BRIC countries — are seen as potential buyers The IMF said last week that Russia intended to buy up to US$10 billion in the multilateral institution’s bonds.

China has the largest forex reserves in the world, which is currently about US$1.9 trillion.

Investing in a substantial amount of bonds could expand China’s clout at the IMF, according to observers.

Source : Konaxis

“Our contributions to IMF’s fund-raising will come in the form of an SDR bond,” Hu Xiaolian said. “We are in discussions with the IMF,” she added at the briefing held ahead of a meeting on Monday (May 10 ) with British officials including finance minister Alistair Darling.

Hu, who also heads the State Administration of Foreign Exchange, explained the prospects of the renminbi Chinese currency playing a greater role in international money markets or trade.

“It’s not simply a case of a country wanting to internationalise a currency. It needs the recognition of the market and the confidence of investors in the country’s policies,” Hu said.

In March, a senior Russian government source claimed China?s support in its call for a discussion on how to replace the dollar as the world’s primary reserve currency.

Bankers assume that about two-thirds of China’s nearly $2 trillion in reserves is parked in dollar assets, primarily U.S. government and other bonds.

The IMF created SDRs in 1969 as a way to support its 185 member states. They are allocated according to members’ quotas.

Hu announced last month that China had almost doubled its gold reserve, from 600 tonnes in 2003 to the current level of 1,054 tonnes, a move seen as an attempt to diversify the investment risk against a depreciating U.S. dollar.

Hu, in explaining the significant rise on gole reserve, said that China had been buying gold in its domestic market over the past five years, but had only recently refined this up to a standard high enough to count as a reserve.

“We will continue to announce our gold reserve,” Hu said.

Source : Konaxis