After Hedging, Geithner Affirms Dollar’s Dominance
The U.S. dollar will remain the world’s dominant reserve currency, and U.S. government actions will ensure that this is the case, Treasury Secretary Timothy Geithner said Wednesday.
“The dollar remains the world’s dominant reserve currency. I think that’s likely to continue for a long period of time,” he said, adding, “as a country we will do what is necessary to make sure we are sustaining confidence” in our financial markets and economy, and that will support the dollar.
Mr. Geithner’s strong words on the dollar came in response to questions at an event held by the Council on Foreign Relations in New York. He had been asked for his reaction to a Chinese central bank proposal that appeared to suggest that nation wanted to create a replacement for the dollar as a global reserve currency.
Initially, Mr. Geithner’s comments weighed the Chinese proposal in very diplomatic terms. He praised the Chinese central-bank leader, although he said he hadn’t read the proposal. Mr. Geithner said he believes the market may have gotten ahead of itself in interpreting the Chinese proposal.
Still, Mr. Geithner also said the dollar’s future “depends primarily on how effective we are” at affecting an economic recovery and return the government toward a more sustainable fiscal path. He added that “the politics are in a better place” to achieve those two necessary factors.
Originally posted on WSJ.com