Bernanke: No Sign That Dollar Is Losing Its Reserve Currency Status

By Victoria McGrane and Corey Boles

Federal Reserve Chairman Ben Bernanke said Wednesday that he doesn't see any signs that the U.S. dollar is losing its status as the world's reserve currency.

The amount of reserves being held in dollars "is actually growing, not shrinking," he said during testimony before the House Financial Services Committee, predicting that the dollar's reserve currency status would remain intact "at least for the foreseeable future."

Asked why there was chatter of the dollar losing its status as the currency in which investors feel safe holding cash, Mr. Bernanke noted that China would like its currency to achieve reserve status but "there's some distance for them to go before they can get to that point."

He said that if the dollar lost its status, it probably would lead to an increase in the interest rates paid by the U.S. because there would be fewer investors willing to hold U.S. bonds. That in turn could have some impact on the U.S. economy, he said, adding that this scenario is "not a very likely prospect in the foreseeable future."

Write to Victoria McGrane at victoria.mcgrane@wsj.com and Corey Boles at corey.boles@wsj.com

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  02-27-131243ET
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