France, Russia want deeper currency debate

By Anna Willard

AIX-EN-PROVENCE, France (Reuters) - France and Russia on Sunday urged a debate about the world's reserve currencies saying the current system, which is dominated by the U.S. dollar, was out of date.

However, Russia said at the moment there was no obvious replacement for the U.S. dollar and the euro and European Central Bank Jean-Claude Trichet said it was important that the United States stayed committed to a strong currency.

Leaders from the Group of Eight major industrial nations and the world's main developing economies will hold talks from July 8-10 in the Italian city of L'Aquila.

China has been pushing for a debate on reserve currencies at the meeting.

"We should explore a better coordination of foreign exchange policies which would raise the question over the medium term of the balance of exchange rates and the role of currencies that have changed both as a result of the crisis and the role played by emerging market countries," France's Economy Minister Christine Lagarde told reporters at a conference.

Several emerging market countries have said they want to reconsider the role of the dollar and to see a more diversified international monetary system.

"The dollar system or the system based on the dollar and euro have shown that they are flawed. But I am a realist and I understand that today there is no alternative to the dollar or the European currency," Russian President Dmitry Medvedev said in an interview with Italian media.

"There should be more reserve currencies. So we consider that we need to think about the creation of regional reserve currencies."