Joseph Stiglitz, the 2001 recipient of the Nobel Prize in Economics, said on Friday that the global financial system is in critical need of reform, as its instability bodes problems for both "rich" and "poor".

The recent global financial crisis is related to the global financial system in general, as the system does not self-correct or self-stabilize, according to Stiglitz. A new system that can serve the whole world is needed, Stiglitz said.

Stiglitz made the remarks during a forum held at the 16th World Congress of the International Economic Association (IEA), which concluded Friday.

Over a hundred of persistent economic crises have emerged since a period of economic liberalization began in the 1980s, Stiglitz said. These crises are also linked to the failures of the global financial system, according to Stiglitz.

Before the current crisis, the United States was unable to manage its inflow of capital, Stiglitz said. This led to financial problems in the United States that quickly spread around the world, leading to the global financial crisis, Stiglitz said.

Inflation that is caused by excessive capital inflow can quickly become worse if a country's self-correcting mechanisms fail to work, he said.

"If you just focus on nationalities, you cannot be self-regulated. This kind of valuation focuses on individual units, but not the whole system," he said.

It is Stiglitz's belief that the current global financial system tips the balance in favor of richer countries, with hundreds of billions of dollars going from underdeveloped countries to developed ones.

"Rich countries borrow money from poor countries at very low rates," Stiglitz said.

Despite the fact that the global market is so heavily integrated, the United States tends to worry about its own economy exclusively, he said.

"In fact, where the money should go is the economy in the growth, not the United States, but China, India and other emerging markets such as Brazil," he said.

"The current system does not work well and we need reforms," he said.

He called for a reformed global reserve system that will enhance global stability, strengthen global growth and be more equitable.

"The current system, where a single currency dominates as a reserve, is an anachronism in the twenty-first century," Stiglitz said.

He said that China's RMB should be a part of any global composite reserve currency, such as the special drawing rights (SDR).

"China has been both more pragmatic and balanced. Given China's increasing role in the global economy, it's time for China's voice to be more strongly heard," he said. "China brings a different view to the table of global debate."

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