CNBC just debunked this, but in case there was any doubt, Tim Geithner is still a strong believer in the dollar.
Apparently there was a wire report referring to a Q&A he was giving at the Council on Foreign Relations, and was asked about a Chinese economist’s call for expanded use of the IMF’s Special Drawing Rights, perhaps as an alternative to the Dollar.
Here’s the relevant clip from ForeignPolicy.com’s liveblog of the presentation:
9:52: Geithner is asked about China (not my question) and the IMF’s new proposals for expanded lending. He responds by praising Zhou Xiaochuan, China’s central bank governor, but claims that he hasn’t read his proposal in detail. Geithner makes it clear that he is quite open to expanding the IMF’s Special Drawing Rights for less developed countries. Still, he wants it to evolve and be integrated within the current international monetary system — as opposed to the de novo creation of a new global currency.
I’ve read the report (Tim, it’s not that long, take a look!) and Zhou is not proposing anything so radical so soon, so this is a bit of a red herring. Still, Geithner’s statement here carries the same kind of firm pushback that Obama gave yesterday about any move ending the dollar as the global reserve currency.
Geithner follows up by saying that the future of the dollar in the international system is really a function of long-range U.S. fiscal policies. Wants to keep U.S. debt-to-GDP ratio stable, and asserts that there is now a consensus in Washington about fiscal rectitude. This is juuuust a little strange to hear given this year’s fiscal balance sheet.