China does not want to see euro “disappear”

Thursday, 13 January 2011 00:06 -     - {{hitsCtrl.values.hits}}

BEIJING (Reuters) - Europe can “definitely” solve its debt problems and China will continue to support the euro’s role as an alternative to the dollar in global financial markets, a Chinese central bank adviser said on Wednesday.

Xia Bin, an academic adviser to the People’s Bank of China, told Reuters on the sidelines of a forum that no one wishes to see the euro disappear.

Europe’s debt crisis does not alter the long-term strategic position of the euro in the global monetary system, Xia added.

China is estimated to have invested about 25 percent of its $2.85 trillion foreign exchange reserves, the world’s biggest, in the euro.

“In the long run, it is not a problem. Europe will definitely solve the problem,” Xia said.

“We don’t want to see the euro disappear.”

He also said that global financial markets are better off with a balance between the dollar and euro, as opposed to having only dollar dominance.

“Walking on two legs is certainly better than walking on one leg,” Xia explained.

Chinese officials visiting Europe last week expressed confidence in the region’s ability to overcome its debt crisis and have regularly said that they believe the euro is a pillar of the global monetary system.

Xia has previously said that China, which holds the world’s largest stockpile of foreign exchanges, should reduce dollar-denominated assets in its reserves.