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PBOC Adviser: Emerging Economies Can Help Solve European Debt Crisis

DAVOS, Switzerland -(Dow Jones)- Emerging market economies can be part of the solution to Europe's sovereign debt crisis through foreign-exchange reserve flows, an adviser to China's central bank said Friday.

However, Li Daokui, an academic adviser to the People's Bank of China, stopped short of saying that China would increase its investment in European sovereign debt.

"Emerging market economies are actually helping stabilize today's financial markets," he said on a panel at the World Economic Forum.

"A huge chunk of capital flow in the form of currency reserves is actually from the emerging economies," he added.

"One way or another, this money is working day and night. Currently they are stabilizing the U.S. economy mostly," but those funds can also flow to European countries, he said.

"If we want to come up with a solution to the European situation, emerging market economies are actually part of the solution."

-By Aaron Back, Dow Jones Newswires; (8610) 8400-7701; aaron.back@dowjones.com

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