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03-25-2009, 10:26 PM
http://www.politico.com/blogs/bensmith/0309/Geithner_open_to_China_proposal.html?showall
Geithner 'open' to China proposal
Geithner, at the Council on Foreign Relations, said the U.S. is "open" to a headline-grabbing proposal (http://news.yahoo.com/s/ap/20090325/ap_on_re_as/as_china_global_currency) 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 return 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."
http://www.weeklystandard.com/Weblogs/TWSFP/TWSFPView.asp#10960
White House Open to Global Currency? Last night, President Barack Obama expressed confidence in the dollar and declared: "I don't believe that there's a need for a global currency."
Normally, that would settle the issue. But in the past 24 hours two of Obama's top economic advisers have signaled an openness to such a new global currency -- in one form or another. What's going on?
Politico's Ben Smith reports (http://www.politico.com/blogs/bensmith/0309/Geithner_open_to_China_proposal.html) that Treasury Secretary Timothy Geithner said this morning that he was open to a new global currency to replace the dollar, as proposed by a Chinese central banker. Geithner, according to Smith, said that the proposal -- which he has not yet read -- is less transformative that headlines have suggested. "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," Geithner said.
Later, the moderator, per Smith "apparently sensing a gaffe," asked Geithner to clarify his remarks. Geithner walked back his earlier comments and said he does not see the dollar being sidelined by a new currency.
But Geithner wasn't the only top Obama adviser who refused to rule out a transition to a global currency. White House economic adviser Austan Goolsbee said much the same thing yesterday afternoon in an interview with CNN's Wolf Blitzer. Although he characterized such a change as "unlikely," Goolsbee twice declined to rule out such a global currency despite being pressed by Blitzer. "I haven't seen the details of the proposal," Goolsbee said. The entire exchange follows:
BLITZER: The Chinese suggesting today, this dollar, U.S. dollar, should be replaced as international currency, because they are beginning to have concerns that you are printing, the U.S. government is simply printing too many of these dollars and will lose its value as an international currency. What's your reaction?
GOOLSBEE: It strikes me as probably unlikely.
Different people have in the past argued for world currencies or new -- new currencies before. I believe the U.S. at this point is the safest place to invest in the world. And it's likely to remain that the dollar is a critical currency in the years ahead.
BLITZER: So, you -- you don't like some new international currency that some Chinese are proposing?
GOOLSBEE: Well, look...
BLITZER: I assume that's right, right?
GOOLSBEE: I haven't seen the details of what they are proposing.
I mean, the dollar is the dollar. If people don't want to buy it, they don't buy it. But I think you have seen sort of a flight to the dollar in -- in times of trouble.
I don't know enough about monetary policy and currency to analyze the potential benefits and drawbacks of such a change, though several people I've spoken to believe it's an idea that's as undesirable as it is unworkable. But as a matter of instilling confidence in the U.S. economy at a time when such confidence is critical, it seems that Obama's answer was much better than the mixed messages coming from his top economic advisers.
And of course the Dollar dropped....
http://www.ft.com/cms/s/0/e4c56948-1946-11de-9d34-0000779fd2ac.html
Dollar dips on Geithner’s ‘loose talk’
By Krishna Guha and Tom Braithwaite in Washington and Peter Garnham in London
Published: March 25 2009 14:19 | Last updated: March 26 2009 01:14
The dollar fell briefly on Wednesday after Tim Geithner, the Treasury secretary, appeared to suggest that the US was open to exploring a Chinese proposal to reduce reliance on the dollar as the world’s reserve currency.
Mr Geithner told the Council for Foreign Relations that he had not studied the proposal by Zhou Xiaochuan, Chinese central bank governor, for greater use of special drawing rights – a synthetic currency maintained by the International Monetary Fund that represents a basket of actual currencies – in global reserves, but added: “We are quite open to that.”
He said increased use of SDRs should be thought of as an “evolutionary” step rather than a step towards “global monetary union”.
The dollar fell 1.3 per cent against the euro as headlines saying “Geithner open to SDR currency” flashed across traders’ screens. With the currency falling, Mr Geithner’s interviewer – Roger Altman, a deputy Treasury secretary in the Clinton administration – gave Mr Geithner the chance to clarify.
The Treasury secretary said: “I think the dollar remains the world’s dominant reserve currency.” The dollar subsequently recovered much of its losses.
Treasury officials said Mr Geithner and President Barack Obama had both rejected the idea that a global currency could take the place of the dollar internationally and there was no change in policy. Analysts were nonetheless quick to chide Mr Geithner.
“If there is a lesson from today, it is that the dollar is on thin ice and any loose talk will be quickly punished,” said Chris Turner, strategist at ING Capital Markets.
Experts are uncertain about China’s proposal. “This is obviously not something that is going to happen for quite a long time,” said Morris Goldstein, a fellow at the Peterson Institute.
“The crisis does raise a lot of fundamental issues . . . and the reserve currency is one of them.”
Nothing like a concerted effort to destroy our economy from those who are supposed to keep it running......
Geithner 'open' to China proposal
Geithner, at the Council on Foreign Relations, said the U.S. is "open" to a headline-grabbing proposal (http://news.yahoo.com/s/ap/20090325/ap_on_re_as/as_china_global_currency) 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 return 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."
http://www.weeklystandard.com/Weblogs/TWSFP/TWSFPView.asp#10960
White House Open to Global Currency? Last night, President Barack Obama expressed confidence in the dollar and declared: "I don't believe that there's a need for a global currency."
Normally, that would settle the issue. But in the past 24 hours two of Obama's top economic advisers have signaled an openness to such a new global currency -- in one form or another. What's going on?
Politico's Ben Smith reports (http://www.politico.com/blogs/bensmith/0309/Geithner_open_to_China_proposal.html) that Treasury Secretary Timothy Geithner said this morning that he was open to a new global currency to replace the dollar, as proposed by a Chinese central banker. Geithner, according to Smith, said that the proposal -- which he has not yet read -- is less transformative that headlines have suggested. "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," Geithner said.
Later, the moderator, per Smith "apparently sensing a gaffe," asked Geithner to clarify his remarks. Geithner walked back his earlier comments and said he does not see the dollar being sidelined by a new currency.
But Geithner wasn't the only top Obama adviser who refused to rule out a transition to a global currency. White House economic adviser Austan Goolsbee said much the same thing yesterday afternoon in an interview with CNN's Wolf Blitzer. Although he characterized such a change as "unlikely," Goolsbee twice declined to rule out such a global currency despite being pressed by Blitzer. "I haven't seen the details of the proposal," Goolsbee said. The entire exchange follows:
BLITZER: The Chinese suggesting today, this dollar, U.S. dollar, should be replaced as international currency, because they are beginning to have concerns that you are printing, the U.S. government is simply printing too many of these dollars and will lose its value as an international currency. What's your reaction?
GOOLSBEE: It strikes me as probably unlikely.
Different people have in the past argued for world currencies or new -- new currencies before. I believe the U.S. at this point is the safest place to invest in the world. And it's likely to remain that the dollar is a critical currency in the years ahead.
BLITZER: So, you -- you don't like some new international currency that some Chinese are proposing?
GOOLSBEE: Well, look...
BLITZER: I assume that's right, right?
GOOLSBEE: I haven't seen the details of what they are proposing.
I mean, the dollar is the dollar. If people don't want to buy it, they don't buy it. But I think you have seen sort of a flight to the dollar in -- in times of trouble.
I don't know enough about monetary policy and currency to analyze the potential benefits and drawbacks of such a change, though several people I've spoken to believe it's an idea that's as undesirable as it is unworkable. But as a matter of instilling confidence in the U.S. economy at a time when such confidence is critical, it seems that Obama's answer was much better than the mixed messages coming from his top economic advisers.
And of course the Dollar dropped....
http://www.ft.com/cms/s/0/e4c56948-1946-11de-9d34-0000779fd2ac.html
Dollar dips on Geithner’s ‘loose talk’
By Krishna Guha and Tom Braithwaite in Washington and Peter Garnham in London
Published: March 25 2009 14:19 | Last updated: March 26 2009 01:14
The dollar fell briefly on Wednesday after Tim Geithner, the Treasury secretary, appeared to suggest that the US was open to exploring a Chinese proposal to reduce reliance on the dollar as the world’s reserve currency.
Mr Geithner told the Council for Foreign Relations that he had not studied the proposal by Zhou Xiaochuan, Chinese central bank governor, for greater use of special drawing rights – a synthetic currency maintained by the International Monetary Fund that represents a basket of actual currencies – in global reserves, but added: “We are quite open to that.”
He said increased use of SDRs should be thought of as an “evolutionary” step rather than a step towards “global monetary union”.
The dollar fell 1.3 per cent against the euro as headlines saying “Geithner open to SDR currency” flashed across traders’ screens. With the currency falling, Mr Geithner’s interviewer – Roger Altman, a deputy Treasury secretary in the Clinton administration – gave Mr Geithner the chance to clarify.
The Treasury secretary said: “I think the dollar remains the world’s dominant reserve currency.” The dollar subsequently recovered much of its losses.
Treasury officials said Mr Geithner and President Barack Obama had both rejected the idea that a global currency could take the place of the dollar internationally and there was no change in policy. Analysts were nonetheless quick to chide Mr Geithner.
“If there is a lesson from today, it is that the dollar is on thin ice and any loose talk will be quickly punished,” said Chris Turner, strategist at ING Capital Markets.
Experts are uncertain about China’s proposal. “This is obviously not something that is going to happen for quite a long time,” said Morris Goldstein, a fellow at the Peterson Institute.
“The crisis does raise a lot of fundamental issues . . . and the reserve currency is one of them.”
Nothing like a concerted effort to destroy our economy from those who are supposed to keep it running......