UPDATE 1-Dlr likely to stay lead currency-Japan MOF official

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* China not making yuan international currency-MOF official

* Dollar’s role has been questioned since financial crisis
(Adds details)

By Stanley White

TOKYO, March 18 (BestGrowthStock) – Neither the euro, the yen nor the
yuan are likely to replace the dollar as the world’s leading
currency, a senior Japanese Finance Ministry official said on
Thursday.

The dollar’s role as the world’s reserve currency has come
under attack since the global financial crisis spread from the
United States two years ago.

Despite doubts about the dollar’s status, it has become such
an essential part of the global financial system that other
countries should work to stabilise the system, International
Bureau Director-General Takehiko Nakao said at a seminar. No
other currency offers the depth and liquidity to replace the
dollar, he said.

“Even if the use of the euro, the yen and the yuan were to
spread, it is difficult to expect any of them to become a global
reserve and payment currency,” Nakao said, according to the text
of a speech.

Overseas investors have reduced holdings of
dollar-denominated assets, while some countries have diversified
their reserves away from the greenback, due to worries about
over-dependence on the U.S. economy and a growing U.S. budget
deficit.

A fragmented government bond market makes it difficult for
the euro to replace the dollar, the text of Nakao’s speech
showed.

Chinese officials also aren’t trying to elevate the yuan to
an international currency, Nakao said, according to the text. The
Japanese government’s efforts to promote the yen ended in the
1980s and the country needs to consider the costs and benefits of
trying to make the yen an international currency, the text
showed.
Investing Analysis

(Editing by Joseph Radford)

UPDATE 1-Dlr likely to stay lead currency-Japan MOF official