Hu questions future role of U.S. dollar

(FT) -- China's president Hu Jintao has raised questions on the role of the US dollar in the global monetary system on the eve of a state visit to Washington, saying "the current international currency system is the product of the past".
Mr Hu, who arrives in Washington on Tuesday, also delivered a thinly veiled critique of US monetary policy, underlining China's concern about the impact on its own economy of recent stimulus measures taken by the US Federal Reserve.
"The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the US dollar should be kept at a reasonable and stable level," said Mr Hu.
Mr Hu made his comments in response to written questions from two US newspapers, the Washington Post and the Wall Street Journal.
His unusually blunt comments on the US-led monetary system as a "product of the past" is confirmation that China will continue to take measures to internationalise its own currency, the renminbi.
However, Mr Hu said that "making the RMB an international currency will be a fairly long process".

Mr Hu rarely gives newspapers interviews, especially to western outlets, leaving most high-profile media public appearances at home and abroad to be conducted by Wen Jiabao, the country's smooth-talking premier.
Although Mr Hu's stiffly worded answers contain little that conveys any of his own personality, their distribution illustrates the importance China attaches to the US trip, which also includes a stop in Chicago.
Despite what he acknowledged as a "sensitive" issue of disagreement between the US and China, he generally struck a positive note on bilateral ties, saying the two sides could work productively together.
"There is great potential for our mutually beneficial co-operation both in advancing Asia-Pacific regional co-operation and in improving global economic governance and promoting sustainable growth of the world economy," he said.
Mr Hu strongly criticised the structural faults in the world's banking system that led to the 2008 financial crisis.
"Its root cause lies in the serious defects of the existing financial system," he said, adding that global institutions had failed to fully reflect the changing status of developing countries in the world economy and finance.

Mr Hu will be feted in the White House with a state dinner on Wednesday, the type of event that the administration reserves for close friends or countries and leaders that it thinks need to be cultivated.