PARIS - WORLD leaders are bound to express the hope that the worst of the global economic crisis is passing when they meet this week, but they are now under pressure, too, to manage a Chinese challenge to US dollar supremacy.

Beijing, which has floated the idea of an alternative to the dollar as world reserve currency, wants the matter - sensitive in financial markets wary of risks to US asset values - broached at a three-day summit this week in Italy, officials say.

Leaders from the Western economic powers and Russia meet in Italy on Wednesday and are joined the day after by leaders from China, India, Brazil and others to discuss global challenges - chief among them the worst recession in living memory.

According to a senior White House official, United States President Barack Obama sees the L'Aquila meeting as an opportunity for a progress report on efforts to shore up the global economy since London hosted a G-20 summit in April.

'It's a time when the leaders can get together and assess where they are in the economic recovery effort, what further steps need to be taken to restore the balance of economic growth, expand and restore exports, and create jobs,' said Mr Michael Froman, US deputy national security adviser for international economic affairs.

At the G-20 summit in London, Mr Obama and his peers agreed to commit US$1 trillion (S$1.45 trillion) to the International Monetary Fund and other global bodies to help struggling economies.

German Chancellor Angela Merkel's advice: Do not expect any grand initiatives in Italy, largely because governments are already pumping trillions of dollars into bank stabilisation and economic stimulus, and also because they have their eyes on a bigger G-20 summit in the US city of Pittsburgh in September.

The best the Italians can expect from the meetings in the quake-hit town of L'Aquila, economists say, is a batch of statements that commit the old and new economic powers to keep working together to contain the crisis and, once that is done, envisage new rules for a better regulated global economy.

Mr Carl Weinberg of High Frequency Economics in New York said genuine coordination beyond carefully negotiated communiques is hard to come by when governments are spending so much money to tend to their own voters and industries right now. 'In a time when fiscal budgets are stretched and deficits are reaching historic proportions, few governments will be able to find the cash to support foreigners' standards of living.

Summit host Silvio Berlusconi, Italy's Prime Minister, may find it easy enough to broker what the leaders can say about the state of the economy right now, namely that the situation may be stabilising but the world is far from out of the woods.

Please read the full story in Monday's edition of The Straits Times

REUTERS, AGENCE FRANCE-PRESSE