Putin urges reserve currency move

Russian Prime Minister Vladimir Putin speaks at Davos

Mr Putin suggested that some protectionism would become inevitable

Russian Prime Minister Vladimir Putin has told the Davos economic forum it is dangerous for the world to over-rely on the dollar as its reserve currency.

He called for a range of reserve currencies and said he envisaged the emergence of several strong regional currencies in the future.

He advised against isolationism and state economic control as ways out of a "perfect storm" in the world economy.

And he warned against military spending as a way to boost economic growth.

Mr Putin, who became prime minister last year after two presidential terms which saw rapid economic growth in Russia, was addressing the World Economic Forum on its first full day of business.

"Excessive dependence on what is essentially the only reserve currency is dangerous for the world economy, therefore it would be expedient to encourage an objective process for the emergence of several strong regional currencies in the future," he said.

Countries issuing such currencies should, he argued, show more policy openness.

The US dollar continues to dominate official foreign exchange reserves, accounting for 63.9% in 2007 compared with 25.5% for the euro and 4.7% for sterling.

Mr Putin said some protectionism might be inevitable amid a global crisis but he urged against "isolationism and unrestrained economic selfishness".

He said that Russia opposed spending more money on defence as a way to boost economic growth, as this only aggravated the problem.

Russia's prime minister also called for a return to "balanced" world energy prices and a new international legal framework for energy security.

He wished US President Barack Obama's new team "success", hoping for constructive co-operation between Washington and Moscow.