US, China see dlr as main reserve currency: Geithner

BEIJING (Reuters) - China agrees with the United States that the dollar will remain the world's main reserve currency for a long time to come, U.S. Treasury Secretary Timothy Geithner said on Tuesday.

Chinese central bank governor Zhou Xiaochuan has floated the long-term possibility of replacing the dollar as the world's main reserve currency with the Special Drawing Right, the International Monetary Fund's unit of account.

But Geithner, wrapping up two days of high-level talks, said: "I believe the Chinese expect the dollar to be the principal reserve currency for a long period of time, as do we."

Geithner said Chinese officials had quizzed him on America's economic outlook rather than the government's ballooning budget deficit.

"They're interested in where we are in recovery, both in the U.S. and China and around the world, and what we're doing to carry forward reforms we committed to at the G20," he said.

Chinese officials have expressed concern that heavy deficit spending and an ultra-loose monetary policy could spark inflation, eroding the value of China's U.S. bond holdings.

But Geithner said: "We have a strong, independent Fed and I am completely confident they have the ability to do their job under the law, which is to keep inflation stable and low over time, and that they will be able to -- and certainly intend to -- unwind these exceptional measures as soon as they have served their purpose."

(Reporting by Glenn Somerville; Writing by Alan Wheatley; Editing by Ken Wills)