No reason to worry over Iran dlr shift threat-Buba

SINGAPORE, Sep 16 (Reuters) The head of Germany's central bank on Saturday played down a threat by Iran to shift some of its reserves out of dollars because of a U.S. move to punish an Iranian bank for allegedly financing terrorism.

Iranian Central Bank Governor Ebrahim Sheibany told the publication Emerging Markets that Tehran may diversify out of the dollar in retaliation against the U.S. Treasury's designation of state-owned Bank Saderat as a financier of terrorism.

But Bundesbank President Axel Weber, a member of the European Central Bank's governing council, told reporters in Singapore: ''I think one should see things like that in a relaxed way.'' German Finance Minister Peer Steinbrueck told the same briefing that exchange rates would be a major topic at Saturday's meeting of Group of Seven finance ministers and central bank chiefs.

Turning to the outlook for the world economy, Steinbrueck added: ''The situation is the best in years but major risks remain.'' Fears of a disorderly shift out of U.S. assets by central banks have hung over the international financial system for several years.

Sheibany said the decision by the U.S. Treasury, which effectively cuts Bank Saderat off from any dealings with the U.S. financial system, might cause Iran to distance itself from the dollar and would prompt other countries to be cautious.

''Even now we are using other currencies and this encourages us to get away from the dollar,'' he was quoted as saying in an interview on the sidelines of the annual meetings of the International Monetary Fund and World Bank.

One of the main topics of the meetings is an overhaul of the IMF's shareholding structure to give emerging economies a louder voice in the running of the 184-member agency.

Some European countries, fearful of losing influence, object to a U.S. proposal to allocate voting shares based largely on a country's share of global gross domestic product.

''The one-sided U.S. demand to put GDP at the centre of the new IMF formula -- that's not the German position,'' Steinbrueck said.

REUTERS PDS VP0715