Greenspan-foreigners still willing to hold US debt

Wed Jul 21, 2004

WASHINGTON, July 21 (Reuters) - The willingness of foreigners to hold long-term U.S. government debt has not diminished, but there might come a time when buyers will be forced to diversify, Federal Reserve Chairman Alan Greenspan said on Wednesday.

"With respect to financing our current account deficit, I think our concern is that unless we bring it down in some form or another we will begin to build up a level of dollar claims against American residents which will eventually place our foreign trading partners in a position where even though they may say the rate of return here is very good, that they have to diversify out of heavy accumulation of U.S. dollar obligations," Greenspan told the House of Representatives Financial Services Committee.

"There is no evidence that we're anywhere near a problem of that nature, but if you project down the road, I can't see how we can avoid it in one way or another," he said.

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