MNI POLICY: China Should Step in Int'l Order: Fmr PBOC Governor

China should strengthen research in multilateralism and multilateral institutions to drive China's influence in the global agenda and establish a rule-based international order, Zhou Xiaochuan, the former Governor of the People's Bank of China said in a speech at the 11th Caixin Summit on Friday.

China should also be aware of the spillover effect of monetary and financial policies of other countries, said Zhou.

"The currency swap measures taken by the Federal Reserve and a few developed counties are not adaptable to developing countries," said Zhou, "We should take into account the possibility of using SDR to create liquidity and the possible adjustments to the IMF guidelines."

The world is lacking a global institute capable of creating liquidity both through ample financial resources and fiscal expansions, as the Federal Reserve did for the US during its domestic rescue in 2008, Zhou said.

Zhou stressed that international institutes and coordination are needed for resolving conflicts in areas such as digital tax and the move towards a carbon neutral world. The development of the digital economy has resulted in confusion over how to collect from digital businesses, and a multilateral institute would help resolve these conflicts.

The possible disputes regarding the purchasing of carbon quotas and carbon taxes also call for a coordination mechanism to achieve consensus, Zhou said.