Mr. Gates's concern that widening U.S. budget and trade deficits are undermining the greenback was echoed in Davos by policy makers including European Central Bank president Jean-Claude Trichet and German Chancellor Gerhard Schroeder.

The dollar fell 21 per cent against a basket of six major currencies from the start of 2002 to the end of last year.

The U.S. trade deficit swelled to a record $609.3-billion last year, and total U.S. government debt rose 8.7 per cent to $7.62-trillion in the past 12 months.

"It is a bit scary," Mr. Gates said. "We're in uncharted territory when the world's reserve currency has so much outstanding debt."

U.S. President George W. Bush is pledging to clamp down on spending to halve the budget deficit during his second term. The administration releases its fiscal 2006 budget on Feb. 7.

The U.S. budget shortfall is "the No. 1 risk, disregarding geopolitical risks" to the global economy, German deputy finance minister Caio Koch-Weser said in a Jan. 27 interview in Davos. He urged Mr. Bush to present a "credible" plan for getting the deficit under control.

Chinese central bank adviser Yu Yongding said in Davos that the U.S. government should do more to tackle its record current-account deficit and ease pressure on China to loosen its currency's peg to the dollar. "The U.S. should take the lead in putting its own house in order," he said. "It's the root cause" of global imbalances.

U.S. policy makers, including Trade Representative Robert Zoellick, defended Mr. Bush's deficit-reduction plans and said the U.S. trade gap reflects sluggish growth in Europe and Japan, which reduces foreign demand for American goods.

Mr. Gates mirrored the views of his friend Warren Buffett, the billionaire U.S. investor who has bet against the greenback since 2002. "Unless we have a major change in trade policies, I don't see how the dollar avoids going down," Mr. Buffett said in a Jan. 19 interview on CNBC business news channel.

Mr. Gates in December joined the board of Omaha-based Berkshire Hathaway Inc., the investment company that Mr. Buffett runs.

Forbes magazine's list of billionaires ranks Mr. Gates, aged 49, as No. 1. Mr. Buffett, 74, is second, with more than $30-billion. Almost all of it is in Berkshire stock.