In March 2009, a few months after the outbreak of the global financial crisis, the governor of China’s central bank, Zhou Xiaochuan, published an essay on the bank’s website. Zhou criticized the international monetary system for “the inherent deficiencies caused by using credit-based national currencies” and praised the Special Drawing Right (SDR), the synthetic currency created by the International Monetary Fund (IMF). The SDR “serves as the light in the tunnel for the reform of the international monetary system,” Zhou wrote.
Zhou’s call for a greater role for the SDR attracted attention around the world. Many observers viewed his comments as a sign of China’s readiness to challenge the U.S.-dominated international monetary order. Indeed, several years later, in 2015, China got its own currency, the renminbi (RMB), admitted to the SDR basket, which the year before had included only the dollar, the pound sterling, the yen, and the euro. Some Western analysts saw that measure, too, as a sign of China’s interest in challenging the international monetary system.
In fact, Zhou’s 2009 statement was not as revolutionary as it seemed. His comments reflected China’s long-standing position that the SDR should play a greater role in the international monetary system, making it less detrimental to developing countries and easing some of the instability produced by its dependence on national currencies as reserves. That position says more about China’s national identity than about its interest in challenging the U.S.-dominated international monetary system.
THE EMERGENCE OF THE SDR
The international monetary system created at the end of World War II was based on fixed exchange rates and a strong link between the dollar and gold. By the early 1960s, the economist Robert Triffin had identified a major weakness in this system: the country that issued the global reserve currency (in this case, the United States) had to supply the world with liquidity in its currency—but to do so, it had to run balance-of-payments deficits,
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