China's decision to purchase the International Monetary Fund's first-ever bonds underlines its strong support for the global economic and financial system, IMF chief Dominique Strauss-Kahn said Tuesday.

Beijing had earlier said that if the IMF bonds met its requirements "in terms of safety and return on investment" it would consider buying up to 50 billion dollars of the financial instrument.

"We are grateful to the Chinese authorities for signaling their intention to invest in IMF notes and thereby, helping the IMF membership weather this global economic and financial crisis," Strauss-Kahn said in a statement.

"With this announcement, the Chinese authorities have signaled strong support for the international economic and financial system," he said in a statement welcoming the Chinese move.

Strauss-Kahn said Beijing's decision would be beneficial to all concerned parties.

"On one hand, IMF members' investment in Fund securities will boost the Fund's capacity to help member countries — particularly developing and emerging market countries — cope with the crisis and thus benefit all members by facilitating an early recovery of the global economy.

"At the same time, the new notes will offer members a safe investment instrument with reasonable return."

Strauss-Kahn said that IMF staff would present the necessary documentation to the Fund's executive board to allow the issuance of notes as early as possible.

The 185-nation IMF is struggling to provide financing to countries in trouble amid the global financial and economic crisis.

It has been working to issue its very first bonds, and major developing economies such as Brazil, Russia, India and China — known collectively as the BRIC countries — are seen as potential buyers.

China's forex reserves are the largest in the world and currently stand at about 1.9 trillion dollars.

The IMF said recently Russia intended to buy up to 10 billion dollars in the multilateral institution's bonds.

earlier related report

World Bank boss sees China spurring global recovery

China's stellar growth could help pull the world out of its current economic slump, the head of the World Bank said on Monday, while hailing the yuan's progress toward becoming a global reserve currency.

With Chinese growth in the first quarter of 2009 exceeding most expectations, World Bank president Robert Zoellick said China could act as a catalyst for a global economic resurgence.

"Any forecast in this environment is hazardous, but I think China is likely to surprise on the upside," the former US trade envoy said, speaking at a conference in Canada.

"By and large (China's growth) has not only been a stabilizing force, but a force that will pull the system (out of the downturn)."

China's meteoric rise as a global economic player has boosted world trade in manufactured goods and provided western companies with an enormous new market for their products and services.

Zoellick, who once headed US efforts to reach a new set of global trade rules at the World Trade Organization, urged countries not to hamper this now "symbiotic relationship."

"In this environment, if you had protectionism burst out on one side or the other, or have some doubt put in about financial markets, those are the type of factors that could take a fragile situation and make it worse."

Zollick also praised China's central bank for its efforts to develop the yuan as a global currency.

"Ultimately, that's a good thing. And ultimately it's good if you've got, I think, some multipolarity of reserve currencies to create, to make sure that people manage them well," he said.

Some currency-hawks, particularly in the United States, have seen the rise of the yuan as a threat to the dollar's global standing, one which could undermine US financial stability.

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