Geithner 'open' to China proposal
Geithner, at the Council on Foreign Relations, said the U.S. is "open" to a headline-grabbing proposal by the governor of the China's central bank, which was widely reported as being a call for a new global currency to replace the dollar, but which Geithner described as more modest and "evolutionary." "I haven’t read the governor’s proposal. He’s a very thoughtful, very careful distinguished central banker. I generally find him sensible on every issue," Geithner said, saying that however his interpretation of the proposal was to increase the use of International Monetary Fund's special drawing rights -- shares in the body held by its members -- not creating a new currency in the literal sense.
"We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union," he said.
"The only thing concrete I saw was expanding the use of the [special drawing rights]," Geithner said. "Anything he’s thinking about deserves some consideration."
The continued use of the dollar as a reserve currency, he added, "depends..on how effective we are in the United States...at getting our fiscal system back to the point where people judge it as sustainable over time."
President Obama flatly rejected the notion of a new global currency at last night's press conference.
UPDATE: Evidently sensing a gaffe, moderator Roger Altman told Geithner that it would be "useful" to retun to the question, and asked if he foresaw a change in the dollar's centrality.
"I do not," Geithner said, adding several forceful promises, including, "We will do what's necessary to say we're sustaining confidence in our financial markets."
By Ben Smith
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http://www.politico.com/blogs/bensmith/0309/Geithner_open_to_China_proposal.html?showall
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Dollar Declines on Geithner’s Comment on IMF Drawing Rights
By Ye Xie and Oliver Biggadike
March 25 (Bloomberg) -- The dollar declined against the euro after Treasury Secretary Timothy Geithner said the U.S. is open to enlarging special drawing rights at the International Monetary Fund.
The U.S. currency pared losses after Geithner predicted the dollar will remain the world’s effective “reserve currency.” The special drawing rights are currency units valued against a composite of currencies.
“It’s a basket of currencies, and the dollar has the biggest weight in the basket,” said Brian Dolan, chief currency strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. “The dollar has the most to lose with the expansion of the basket.”
The dollar declined 0.7 percent to $1.3558 per euro at 10:55 a.m. in New York, from $1.3468 yesterday. The U.S. currency dropped 0.2 percent to 97.64 yen from 97.86. The euro increased 0.4 percent to 132.32 yen from 131.81.
Geithner commented in response to a question after a speech at a conference in New York today. He was asked to clarify earlier remarks that the U.S. would be “open” to expanding the IMF’s special drawing rights.
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http://www.bloomberg.com/apps/news?pid=20601101&sid=aJSs_yxxpguc&refer=japan
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My Thoughts
Almost everytime Geithner opens his mouth something bad seems to happen. When he discussed his non-plan plan, the stock market tanks. This time he says that he's open to China's suggestion of getting rid of the US dollar and the dollar tanks. Obama needs to invest in a muzzle for poor Timmy.
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