UPDATE 1-Bank of Canada sees recovery starting, C$ a risk

* Growth supported in part by stimulus measures

* Currency strength, volatility slowing growth

* All countries must adopt market-based exchange rates (Adds details)

NEW YORK, Nov 19 - Canada's economic recovery is starting, but its strong currency is offsetting many of the improvements reflected in recent data, Bank of Canada Governor Mark Carney said on Thursday.

In the prepared text of a speech he was delivering in New York, Carney said the economic growth was supported in part by central bank and government stimulus measures, but also by household wealth, commodity prices, better financial market conditions and increased confidence.

"However, heightened volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures," he said.

Carney repeated the bank's conditional pledge to hold benchmark interest rates at a record low until the end of June 2010.

He said the bank could undertake additional measures, such as effectively printing money, if risks to its outlook materialize, such as a stronger than predicted Canadian dollar putting additional downward pressure on growth and inflation.

Turning to the global current account imbalances that contributed to the financial crisis, Carney dedicated his speech to exploring the options for an eventual move away from the U.S. dollar's dominance as the global reserve currency, without endorsing any one proposal.

However, he said the U.S. dollar will prevail for the foreseeable future and that the problem to be resolved is not so much which asset is used for reserves but how flexible currencies are when imbalances occur.

"In general, alternatives to the (U.S.) dollar as the reserve currency would not materially improve the functioning of the system," he said.

"The common lesson of the gold standard, the Bretton Woods system and the current hybrid system is that it is the adjustment mechanism, not the choice of reserve asset, that ultimately matters."

Any rebalancing requires all systemically important economies to adopt market-based exchange rates, he said.

Greater use of the International Monetary Fund's unit of currency, called Special Drawing Rights (SDRs), could be one way of reforming the global monetary system, he said, adding there was no technical impediment to expanding the use of SDRs.