Australian Treasurer Seeks Orderly Withdrawal From U.S. Dollar

  By John Garnaut -- Sydney Morning Herald

  Oct., 19, 2006 -- TREASURER Peter Costello has called on East Asia's central bankers to "telegraph" their intentions to diversify out of American investments and ensure an orderly adjustment.

  Central banks in China, Japan, Taiwan, South Korea and Hong Kong have channelled immense foreign reserves into American government bonds, helping to prop up the U.S. dollar and hold down American interest rates.

  Mr Costello said "the strategy had changed" and Chinese central bankers were now looking for alternative investments.

  "Of course you can have an orderly adjustment," he told reporters. "And what I would recommend is that these matters be telegraphed well in advance. I think we should begin preparing ourselves for it."

  Mr Costello said the "re-emergence" of China as the world's greatest economy "is not something to be feared."

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