Banking

An economist calls for the design of 500 yuan ($74) notes to reduce economic losses in the circulation of China's currency RMB, the Yangcheng Evening News reported.

Mao Yushi, an economist in China, said on his micro blog on Tuesday that the 100 yuan note, the largest face value of RMB, requires quadruple counting efforts compared with the 500 yuan note. It also takes up more space, even posing a bigger risk of theft.

Europe will not let the euro fail and European Union countries are committed to cutting deficits, the president of the European Council told Chinese officials on Tuesday, seeking to ease fears that the eurozone crisis could imperil China's investments.

"All EU countries are bringing down public deficits. The most vulnerable countries are undertaking determined action to come out of the crisis," President Herman Van Rompuy said in a speech at the Central Party School in northwest Beijing, which trains rising Chinese leaders.

"I want to acknowledge the confidence that China has demonstrated towards Europe in those difficult moments. A stable eurozone is in our common interest," he said in his prepared remarks to officials studying at the school.

Finance ministers from China, Japan and South Korea said in a joint statement Wednesday they have agreed to start studying the use of their own currencies in trade settlement, the latest sign of Asian efforts to reduce dependence on the U.S. dollar.

The ministers from the three big Asian economies also said they are "mindful of" challenges such as growing inflationary pressures in Asia, rising global commodity prices and increasingly volatile capital flows into the region.

The yuan was little changed against the dollar on Wednesday as the Chinese and U.S. administrations reiterated their positions regarding the value of the two countries' currencies ahead of their top-level talks in Washington next week.

In a quarterly monetary policy report late on Tuesday, the People's Bank of China reaffirmed that the government will keep the yuan's exchange rate basically stable - a phrase that implies yuan appreciation against the dollar will be gradual and controlled in line with China's economic conditions.

U.S. Treasury Secretary Timothy Geithner said on Tuesday that China is starting to let the yuan rise more rapidly to curb inflation but needs to move even more swiftly toward a market-driven exchange rate.

Two prominent Beijing economists are urging the government to let the yuan float freely as a way to limit the country's immense foreign-exchange reserves, fight inflation and spur the remaking of the Chinese growth model.

"We should quickly stop buying foreign exchange in the market," said Huang Yiping, an economist at Peking University's China Macroeconomic Research Center, told The Wall Street Journal.

"We can have a conditional free float; let the exchange rate be set by the market," Mr. Huang said, adding that under such conditions he figures the yuan would appreciate about 30% in a year, to about five yuan to the dollar.

Mr. Huang is working on his proposal with Yu Yongding, a former adviser to the central bank and a professor at the Chinese Academy of Social Sciences. Mr. Yu in March published an article called "Learning to Float," in which he argued that the Chinese government "should be able to help enterprises and workers that suffer undue pain from the renminbi's appreciation."