Yuan internationalization a big step for world monetary reform

China should steadily promote the internationalization of its currency, the yuan, the head of China's social security fund said Saturday.

The internationalization of the yuan is a significant step for advancing the reform of the international monetary system, Dai Xianglong, chairman of China's National Council for Social Security Funds, said when speaking at annual economic forum in Beijing.

The current international monetary system has not adapted to the new patterns of global economic development, he said, adding that currency diversification is a realistic solution.

Currency diversification means continuing the role of dollar, increasing the role of the euro and internationalizing other currencies, he said.

The US dollar, serving as both the US currency and the most important international currency, will be used for US policy goals when the two roles contradict each other, spurring fluctuations in global financial markets, he said, adding that the dollar has a tendency to depreciate.

He said the Chinese yuan is a stable currency, and so ensures the safety of other countries' assets.

The Chinese currency also enhances world trade, protecting the interests of China's foreign trade and investment, he added.

The internationalization of the yuan will take 15 to 20 years, he said, suggesting an expansion of the overseas circulation of the yuan and an acceleration in the opening-up of China's large commercial banks to speed up the process.

He urged Chinese banks in foreign countries to offer funding in yuan.

He also called for more efforts to reform the interest rate mechanism, to ease the process of the internationalization of the yuan.