With China having floated the idea of a global reserve currency, Rep. Michele Bachmann proposes a constitutional amendment that would bar the U.S. dollar from being replaced with a foreign currency.
WASHINGTON -- Rep. Michele Bachmann wants Congress to head off any thoughts of trading in the greenback for an international currency. The idea of a global reserve bank currency, recently raised by the Chinese, has been much on her mind.
Bachmann, R-Minn., grilled the Treasury secretary and the Federal Reserve chief about it at a hearing Tuesday but apparently was unsatisfied with their categorical rejections of the notion. So on Wednesday, she followed up with a resolution calling for a constitutional amendment barring the dollar from being replaced by any foreign currency.
To be sure, the Chinese are not calling for the U.S. to adopt a new global currency. Rather, as the largest creditor to the U.S., China wants the International Monetary Fund to explore a new international reserve currency as a basis for international trade and financial transactions. Financial experts say China's request reflects its growing unease with the troubled American economy and the inflationary risk of the U.S. government's growing deficits.
During the hearing Tuesday, in response to questions from Bachmann, both Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner said they oppose the idea. President Obama was also quoted in today's early editions of the Taipei Times saying "I don't believe there is a need for a global currency."
Bachmann, however, said Geithner "left the option on the table" in answer to a question at a Council on Foreign Relations event on Wednesday. Despite his attempts to clarify his opposition later in the day, Bachmann said in a statement that she calls into question "his true intention."
Current law prohibits foreign currency from being recognized in the U.S. But Bachmann worries that the president also has the power to make and interpret treaties. Her resolution, which had 29 co-sponsors by late Wednesday (none from Minnesota), seeks a constitutional amendment barring any agreement that would lead the U.S. to adopt an international currency. Bachmann spokesman Dave Dziok called the proposal "a preventative measure."