Soros: Dollar Will Remain Reserve Currency

The US dollar will remain the world's reserve currency for a while and it is probable that the world economy will start growing next year, with China, Brazil and India among the first to bounce back, billionaire investor and currencies expert George Soros told CNBC.

"I think the dollar is the dominant currency for a while to come. But in the long run I think it would be important that the US should be subject to the same discipline as the rest of the world," Soros said in an interview after the G20 summit in London.

He also said his recent comments about Britain and the need for funds from the International Monetary Fund had been misreported. UK newspapers reported that Soros had said it was likely that the UK would go to the IMF to fund its budget deficit.

"That was a misleading headline given to an interview where I said it's most unlikely that Britain would need to go to the IMF," Soros said, adding that he was not shorting the pound.

"However the fact that it created such an outcry shows what a stigma there is attached to having to go to the IMF," he said.

Banks' toxic assets will continue to weigh on the world economy and changing accounting rules to allow banks more flexibility in marking to market distressed assets, adopted Thursday in the US, will not help banks as much as recapitalizing them, according to Soros.

"I think much more effective would have been to recapitalize the banks and because of the history of the way the TARP money was spent, it was really very messy and very badly done; because of that there's increasing reluctance by Congress to make new money available," he said.

"And yet, it would be much, much better to create clean banks, banks that are able to lend, I think we missed the boat on that," Soros added.

A long time will be spent allowing banks to "dig themselves out of the hole" and during that period, they will not provide sufficient credit to encourage business and will probably have higher fees, he said.

The world leaders "pulled a few rabbits out of their hat" at the G20 summit in London, and managed to get more than Soros had expected.

"I would say that it's probably the first time that the authorities are probably ahead of the curve," Soros said. "They managed to put together a bigger package than anybody expected."

The $250 billion Special Drawing Rights package is extremely important because it created money internationally and will help to allow countries that are not able to print currency to stimulate their economies.

More and better regulation is needed, but authorities will need to be very careful not to 'go overboard,' Soros said.

As for hedge funds who have threatened lately to leave London, unhappy about the tax regime and business climate, he said: "Where are they going to go? Another planet? I think hedge funds will have to get used to being regulated."

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