Cable says new reserve currency "sensible"

China, the largest foreign holder of US government debt, has called for the creation of a secured global reserve currency amid concern over Washington's rising debt burden. On Saturday it roundly condemned the United States, after S&P's rating downgrade, for its "debt addiction".

"The Chinese have been arguing for a long time that the world monetary system needed reforming and that we need a strong reserve currency, by which I think basically they mean the special drawing rights of the IMF," Cable told BBC TV.

"This argument's been around a long time and it would be a sensible way for the world to move but it's not something we're going to do overnight."

Cable has been a vocal critic of the US Congress's protracted arguments to agree a deficit-cutting deal and had warned that Washington's triple-A sovereign debt rating was at risk.

"In the short run, the United States dollar is the key international currency and although, frankly, the American legislators made a terrible mess of things a few weeks ago, they have now got back on track, they have undertaken to manage their debt in a prudent way," he said.

Copyright Reuters, 2011