U.S. Treasury Geithner: SDR's Cannot Fill Dollars Unique Roll

[shela1153]

http://imarketnews.com/node/27694


WASHINGTON (MNI) - U.S. Treasury Secretary Timothy Geithner told a House panel Wednesday he remains confident that the IMF's Special Drawing Rights is not capable of usurping the U.S. dollar's global reserve currency status.

During a House Appropriations subcommittee hearing on funding requests in the FY12 budget for the Treasury's international programs, Geithner was pressed on the risk that IMF's SDRs could take the dollar's function in the global economy.

"Let me just say clearly, there is no risk of the SDR playing that role, Geithner responded. "The SDR is not a currency, it's a unit of account and it can't provide the role that many people would aspire to it."

"No risk that the SDR is going to play a role that would in any way affect the dollar's role in the international financial system," Geithner reiterated.

He noted that the dollar plays a unique role in the global financial system, and -- in his opinion -- "that's likely to continue."

Geithner underlined the need to manage the nation's long-term debt issues in order to maintain confidence in both the U.S. and its currency.

"We have to make sure we are being very careful ... that we're earning the confidence of Americans and countries around the world, that we can run responsible economic policies, go back to living within our means," he said.

"Those things are important to make sure that, over time, we are sustaining the dollar's role as a major reserve asset," Geithner added.

The Treasury Secretary also slipped in a comment on China's exchange rate regime, again stressing the importance of the world's second largest economy allowing its currency to appreciate over time.

"It's happening now but we'd like it to go further," Geithner said, repeating what has now become a familiar Obama administration refrain.

He noted that China is also relaxing controls on the use of the renminbi internationally, which is also appropriate.

"Over time it will help make sure that the currency moves in response to market forces -- which is very important to us," Geithner said.

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[shela1153]

I think this would be an interesting article to discuss, much has been said about the SDR and what roll they play.