Money and Metals

The Fed chief made a surprising comparison this morning. "(Alan) Greenspan said the United States has benefited from being considered the world's reserve currency, the currency foreigners turn to first when they want to hold investments outside of their country."

"'Although I doubt that the U.S. dollar will lose its status as the world's reserve currency any time soon, there are in my judgment lessons to be learned from the experience of (Britain's currency) as it faded as the world's dominant currency,' Greenspan said."

"Britain made the mistake of trying to impose extensive regulations to try and support its currency's position on the world's stage, which made Britain's economy too rigid in times of financial crisis, he said."

"Greenspan suggested that constraints on financing of the U.S. trade deficit are likely to come from 'foreign investors' fears' of holding too large a share of their investment portfolios in U.S. stocks and bonds."

"He suggested that this change could already be under way. He noted that of the more than $30 trillion in foreign investment tracked by the Bank for International Settlements in the first three months of 2005, 42.5 percent were in dollars and 39.3 percent were in euros."

"The dollar's share was down by 4 percentage points from around three years earlier, while the euro's share was up by 5 percentage points, Greenspan said."