Federal Reserve Chairman Ben Bernanke said on Thursday that a new super currency would weaken the dollar, but he also noted the dollar is not at any immediately risk of losing its status.
U.S. Federal Reserve Chairman Ben Bernanke testifies before the House Financial Services Committee on financial regulatory reform on Capitol Hill in Washington, the United States, Oct. 1, 2009. According to Ben Bernanke, the U.S. dollar is not at any immediate risk of losing its status as a reserve currency. (Xinhua/Zhang Yan)
Zollick warned on Monday that the United States would be mistaken to take for granted the dollar’ s place as the world’ s predominant reserve currency.
“Looking forward, there will increasingly be other options to the dollar,” said the World Bank chief, adding the status would depend how well the U.S. can manage the debt.
Bernanke said in the hearing that he agreed with Zoellick, noting if the U.S. could not get “the macro house” in order, the dollar will be in danger.
When asked what would happen if the dollar were no longer the top reserve currency, Bernanke said that the currency would weaken and the Fed would have to watch for any inflationary effects.
“But again, I want to reiterate that I don’t see this as a near-term risk, so long as we as a country take appropriate steps to mange our fiscal positions and keep inflation low,” said the U.S. central bank chief.