A Beijing Woods monetary system in the making

CHINA'S steady encroachment into the heart of global finance forms part of a changing political and economic order that could eventually reshape the international monetary system. With the International Monetary Fund (IMF) and World Bank beset by weak leadership, ham-fisted decisions (not least over Greece) and failures in governance reform, China is attempting, from within and outside, to adjust the rules of the two Bretton Woods institutions founded in 1944.

Much depends on whether the Chinese authorities can maintain political stability and steer the country to more sustainable growth in coming years. If China succeeds, we could be witnessing the gradual gestation of an alternative model - let's call it "Beijng Woods" - that would be much more Asia-focused (and considerably less free market) than the postwar Washington-centric system.

China's rulers are pushing ahead with measures to strengthen the renminbi - even though it is not fully convertible - to allow it to join the Special Drawing Right (SDR), the IMF's ubiquitous composite unit of account used in official financing and reserves. The bid to join the dollar, euro, yen and sterling in the IMF's monetary denominator, in a review process due to be completed later this year, is essentially symbolic, since the SDR is not a currency. Yet for an emerging-market economy to take a seat at the top table of world money reserved for industrialised nations would massively promote China's credentials across global financial and investment markets.