JPMorgan Chase & Co. (JPM) Chairman and Chief Executive James Dimon said that the U.S. needs a strong dollar.

A strong currency is necessary for a strong economy, Dimon said during the luncheon at the annual meeting of the Securities Industry and Financial Markets Association, or Sifma.

In an interview during the luncheon with television host Charlie Rose, Dimon said regulators should focus on simplifying bank regulation, rather than adding to it. He reiterated comments previously made that in some cases, new regulation is needed, for example to resolve big banks that cannot survive or to create a clearinghouse process for derivatives, but regulation should become more efficient rather than adding new regulatory agencies.

"We are in favor of consumer protection, but we believe we have a chance to simplify regulation rather than add another agency," he said.

Regulators and Congress also shouldn't put too many restrictions on big banks that require extraordinary assistance, such as Citigroup Inc. (C) and Bank of America Corp. (BAC), Dimon said. He said he agreed with the government's pay czar Kenneth Feinberg that "something should be done to regulate the pay" of the executives of companies that got special assistance. But "we need Citi," for example, he said. "It's not good to hamstring those companies."

Asked about the Federal Reserve's growing balance sheet, Dimon said he is more worried about the government deficit than the size of the Fed's balance sheet. Even at this point, the size of the Fed's balance sheet is "a drop in the bucket" compared with the overall assets in the country, he said.

In wide-ranging comments, Dimon also said demand by small businesses for loans is down, but small businesses are having "a tougher time getting credit." The Small Business Administration is only a minor factor in small business lending, he said.

-By Matthias Rieker, Dow Jones Newswires; 212-416-2471; matthias.rieker@dowjones.com