Bernanke weighs in on ‘super currency’

WASHINGTON – Russia and China are advocating the creation of a new super currency, which Fed Chairman Ben Bernanke said Thursday would weaken the dollar if it were to be established.

“It would weaken the dollar, and we would have to watch for any inflationary consequences of that,” Bernanke said during the question and answer segment of a House Financial Services Committee hearing. “I don’t see that as a risk as long as we as a country take efforts to manage our risk and keep inflation low.”

Bernanke added that the dollar is not at any immediate risk of losing its status as a reserve currency, however he acknowledged that if the U.S. doesn’t put its “economic house in order,” risk could eventually grow for the U.S. currency.

Bernanke said he believes the Fed can manage policies to support the U.S. economy without inducing inflation in the short term. “We believe we have the tools and political will to achieve that,” he said.

He responded to a lawmaker who raised concerns about the U.S.’s extensive foreign borrowing, saying that the U.S. needed to save more and spend less.

“The best way we have to raise our savings rate is to improve our financial position,” Bernanke said.