IMF says rouble could become reserve currency

The Russian rouble could potentially become a reserve currency if the country's economy continues to grow and inflation can be brought under control, an International Monetary Fund official said on Sunday.
Russian President Dmitry Medvedev has said he wants to turn the rouble into a key regional reserve currency as part of a Kremlin drive to make Russia an international financial centre.
"It's quite conceivable that the rouble could emerge as a much more important international currency," John Lipsky, the fund's first deputy managing director, told Reuters in an interview at the St Petersburg Economic Forum.
The timetable will emerge in turn," he said.
Lipsky earlier told reporters that fighting inflation and maintaining strong economic growth were among the main tasks facing Russia as it seeks to grow the rouble's influence on world currency markets. "Developments in the Russian economy have been broadly very favourable. There is a sense of confidence and modernisation; an increasing recognition that, if managed well, the Russian economy will play an increasingly important role," he said.
Russia, with a $1.3 trillion economy at the end of last year, is targeting a place among the world's top five economies by 2020, Medvedev has said. But he acknowledges the rule of law needs to be strengthened and corruption must be rooted out.
"To become a reserve currency, experience shows that they're always backed by a developed financial system," Lipsky said. "The development and modernisation of the Russian financial system will open the prospect of the rouble becoming more generally used as a reserve currency."
The IMF forecasts Russian economic growth in the region of 8 percent both this year and next. It forecasts inflation to reach around 14 percent this year, far above the government's current target of 10.5 percent.
Record oil and commodity prices have played a large part in a decade of economic boom in Russia, the world's second-largest oil exporter. The Kremlin wants to diversify the economy in order to reduce its dependence on natural resources. "The best approach to this question is to create the structural and macroeconomic pre-conditions to produce good economic performance: a fiscal policy that creates adequate room for private investment and a monetary policy that creates lower and stable inflation," Lipsky told Reuters. "In that context, issues of diversification will tend to take care of themselves."