Timothy Geithner, president of the New York Federal Reserve, yesterday dismissed the view that the US current account deficit was sustainable, suggesting the risk of a sudden fall in the dollar would grow the longer the trade gap widened.

In a speech at the Royal Institute of International Affairs in London, Mr Geithner said the problem could not necessarily be expected to solve itself.

"Time does not necessarily help. The longer these gaps continue to build, the greater the ultimate adjustment required, and the greater the risks that accompany that process," he said.

"The plausible outcomes range from the gradual and benign to the more precipitous and damaging," he said. "The size and duration of these [ global] imbalances, perhaps the most visible of which is the US current account deficit, present challenges - and risks - for the world economy."

His warning came as Raghuram Rajan, chief economist at the International Monetary Fund, repeated his concern over the risk of a run on the dollar.

Mr Geithner has long focused on the risks associated with the current account deficit. But he does not see a role for monetary policy in responding to the current account by raising interest rates to slow domestic demand growth. Rather, he believes the risks on the external side make it more important for the Fed to keep inflation under control, to avoid adding to the problems and to preserve the Fed's flexibility in a crisis.

Many economists have argued that the risks to the dollar from the bloated current account deficit are mitigated by support for the currency from Asian central banks, which wish to prevent an appreciation of China's yuan undermining export growth. Mr Geithner said this should provide little comfort over the long term.

"A prolonged continuation of the exchange rate arrangement that have given rise to the large increase in foreign official investments in US financial assets is unlikely to be consistent with the domestic requirements of those economies," he said.