Governor of People's Bank of China Yi Gang attends a news conference in Beijing, China on Sept 24, 2019. [Photo/Agencies] Amid COVID, China calls to strengthen G20's ability to thwart any global financial dangers The Chinese central bank governor has called for increasing the general allocation of the international reserve assets created by the International Monetary Fund to enhance all G20 members' ability to handle unintended global financial vulnerability amid the COVID-19 pandemic. The IMF's Special Drawing Right can be used to supplement the official reserves of G20 member countries and to cushion shocks, as recovery is uneven globally with high uncertainties and it may stretch over a longer term for vaccinations to curb variants of the virus, experts said in the past weekend. An SDR is a potential claim on the freely usable currencies of IMF members to provide a country with liquidity. Speaking at a G20 virtual meeting of finance ministers and central bank governors under the Italian presidency, Yi Gang, governor of the People's Bank of China, the central bank, highlighted the importance of boosting the SDR allocation and channeling more SDRs to low-income countries to support economic recovery. The PBOC released some key points of Yi's speech on Saturday. Given the uncertainties and divergent recovery abilities between developing and advanced countries, Yi called for joint debt treatment in a transparent and coordinated manner by all parties, especially private creditors, to support low-income countries in their response to the COVID-19 pandemic, according to the PBOC report. IMF Managing Director Kristalina Georgieva said at the virtual meeting on Friday that the world's growth prospects in 2021 are possibly higher than the IMF's 5.5 percent projection made in January thanks to the sizable additional stimulus in some large economies. Georgieva warned that possible increased bankruptcies and financial stress, including excessive volatility in financial markets, could be consequences of the withdrawal of supportive policies. She welcomed the growing support for a new SDR allocation and the calls for an additional mechanism to enable wealthier G20 members to support low-income countries through SDRs. In a letter to the G20 meeting, US Treasury Secretary Janet Yellen signaled her provisional support for a new allocation of SDRs and urged G20 countries to send their own SDR allocations to low-income countries. According to the IMF, so far SDR 204.2 billion, the equivalent of about $293 billion, has been allocated to members, including SDR 182.6 billion allocated in 2009 following global financial crisis. The value of the SDR is based on a basket of five currencies: listed in order of their contribution, the US dollar, euro, Chinese yuan, Japanese yen and British pound. Pandemic's impact G20 members discussed the challenges that COVID-19 poses for financial stability and concurred that preserving the ability of the financial sector to support the recovery is a key priority, according to the PBOC report. Last week, the surge in US Treasury yields sent shock waves across broader markets, with 10-year yields to hit a new one-year high. "The steep ascent in yields is prompting investors to cast serious doubt over their exposure to equities, especially for tech stocks," said Han Tan, an analyst at FXTM, a global forex trading platform, after seeing big US stock declines with a peak of the Wall Street's fear gauge, the VIX index. Experts warned of additional financial market volatility after the US passed a 1.9-trillion-dollar COVID-19 relief package early Saturday morning, as the market expects large fiscal stimulus may lead to an earlier withdrawal of monetary easing. "We can expect to see more volatile days ahead until markets can reach a greater consensus and a firmer understanding over the next policy steps," Han added. "Now, interest rates are rising sharply, which started to impact the financial market negatively. We believe that the US central bank will react to the rise in interest rates. However, it remains to be seen how strong the response is and whether it can stabilize the stock market," said Zhang Zhiwei, chief economist of Pinpoint Asset Management.