Geithner: Dollar Is Here To Stay

, continuing a string of comments by officials in President Obama's administration, dismissed a proposal by a Chinese official to ditch the U.S. dollar as the world's reserve currency.

Speaking at the Council on Foreign Relations Wednesday morning, Geithner said he was not familiar with People's Bank of China Gov. Zhou Xiaochuan's plan, which would see the elevation of the International Monetary Fund'sSpecial Drawing Right to become the world's de facto reserve currency, effectively replacing the dollar. (See "Beijing Shows Buyer's Remorse.")
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"As I understand his proposal, it's a proposal designed to increase the use of the IMF's special drawing rights. And we're actually quite open to that suggestion. But you should think of it as rather evolutionary, building on the current architectures, rather than moving us to global monetary union," he said.

"It is very important just to underscore that the future evolution of the dollar's role in the system depends really primarily on how effective we are in the U.S. in getting not just recovery back on track, our financial system repaired, but we get our fiscal position back to the point where people will judge it as sustainable over time," Geithner said.

This marks the second major response from a high government official voicing his opinion of Xiaochuan's proposal. On Tuesday, former Fed chief Paul Volcker, speaking at The Wall Street Journal's Future of Finance Initiative, slammed the Chinese plan.

"I think the Chinese are a little disingenuous to say, 'Now isn't it so bad that we hold all these dollars.' They hold all these dollars because they chose to buy the dollars, and they didn't want to sell the dollars because they didn't want to depreciate their currency. It was a very simple calculation on their part, so they shouldn't come around blaming it all on us."

Speaking further about the dollar's future, Geithner said: "I think the dollar remains the world's dominant reserve currency. I think that's likely to continue for a long period of time."