WASHINGTON — -- Federal Reserve Board Chairman Alan S. Greenspan told Congress today that he opposes a "gold standard" in any form and voiced skepticism about giving the metal a greater role in economic policy coordination.
While gold prices are a sign of global inflation or deflation, Greenspan told a House Banking subcommittee, changes in gold and other commodity prices "would have little to say about what policy-makers in any individual country should do."
Greenspan told the panel he generally supported a proposal by Treasury Secretary James A. Baker III that gold prices, along with those of some other raw materials, be more closely monitored by industrial nations.
But he cautioned that there are limits to what such a surveillance could be expected to provide to economic policy-makers in the way of help.
Proposal to World Bank
"In particular, we should avoid any automatic policy response to movements in commodity prices," Greenspan told the House Banking subcommittee on international finance.
The panel is holding hearings on Baker's proposal, made last Sept. 30 in a speech to the annual meeting of the World Bank.
Greenspan said recent increases in the dollar price of gold "simply reflect the dollar's decline" and should not be read as a sign that investors are fleeing from currencies and putting their resources into precious metals.
As for returning to a gold standard, abandoned internationally in 1971, Greenspan testified: "There are too many practical problems associated with restoration of a gold standard, not the least of which is the huge block of outstanding dollar claims in world financial markets today, to make this a useful avenue of development."