The United States should work to reduce its deficits to ensure the world's reserve currency remains strong, Japan's top currency official said Wednesday.
"We want the key currency to be stable. We want the key currency to be strong," Naoyuki Shinohara, vice finance minister for international affairs, said at a conference in Sydney. "We do not want the key currency country to continue running huge current account deficits. We do not want the key currency country to keep borrowing large amounts of money from abroad."
Japan is defending the dollar in response to suggestions by French President Nicolas Sarkozy that there are alternatives. A weaker dollar would reduce the value of Japan's U.S. government debt holdings as well as erode exporters' earnings.
"Fortunately or unfortunately, there's no other currency that can replace the dollar, at least for the foreseeable future," Shinohara said, adding that "global efforts" are required to ensure the "sustainability" of the reserve system.