U.S.told to give 'explanation' for new monetary policy
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A senior Chinese foreign affairs official said on Friday that the United States should "give an appropriate explanation" for its latest relaxed monetary policy, urging the U.S. to take a responsible attitude as a major reserve currency issuing country.
The U.S. Federal Reserve (Fed) announced Wednesday that it would engage in a second round of a process known as "quantitative easing", or QE2.
Through the process, the Fed plans to purchase 600 billion U.S. dollars worth of government bonds in a bid to revive the sluggish U.S. economy. The American central bank hopes this move will ultimately reduce the high jobless rates that continue to plague the U.S. after the economy took a nose dive two years ago.
This is the second round of such stimulus measures, after the Fed purchased 1.7 trillion U.S. dollars worth of mortgage-backed securities and treasury notes between December 2008 and March 2010 in a bid to keep the economy from plunging into Great Depression again.
This move has been drawing wide concerns and criticism.
"For the Fed's new relaxed monetary policy, many countries have expressed worries about what impact it would impose on financial stability," said Chinese Vice Foreign Minister Cui Tiankai at a news briefing.
"The U.S. new monetary policy will affect not only emerging economies but also developed ones," Cui said.
While urging the United States to "take a responsible attitude" as a major reserve currency issuing country, Cui quoted financial experts by saying that the issuance of banknotes in a reckless manner is in fact a disguised form of currency manipulation.
Cui believed that the latest U.S. monetary policy is likely to lead to "spill-over effects", which may eventually evolve into "flooding" if it is not restricted.
"The international community has every reason to feel worried, so the U.S. side owes it a proper explanation for the move," Cui said.
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