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Geithner says he invented 'strong dollar policy' in 1995

Section: Daily Dispatches

Geither Maintains Support for Strong Dollar, Lower Deficits

By Rebecca Christie
Bloomberg News
Tuesday, February 2, 2010

WASHINGTON -- U.S. Treasury Secretary Timothy F. Geithner said he has continued to support the strong dollar policy he helped craft in the Clinton administration when he worked for his predecessor Robert Rubin.

"That particular phrase and commitment of policy was first written in my office at the Treasury Department in 1995," Geithner said today, when asked about the currency during a Senate Finance Committee hearing.

Geithner said he agreed that the U.S. needs to show commitment to lowering its deficits over time, to avoid losing the confidence of investors around the world. That could hurt the economy, raise interest rates and reduce investment, the Treasury chief said.

"If we do not make people believe that we are going to fix those deficits, bring them down over time, then we will risk losing confidence in our financial future," Geithner said.

Investors remained confident in the dollar through the worst of the financial crisis, even though the U.S. was running up record deficits to prop up the banking system, Geithner said. That strengthened the dollar and lowered borrowing costs when the crisis was at its worst, he said.

"As people have become somewhat more confident, they're willing to take risk again," Geithner said. "That's really the story of this period of time. When the world was most at risk and most scared, people were still putting their resources in dollars, and we want to preserve that."

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