US urges quick, aggressive action, strong euro firewall
Timothy Geithner - Photo EC
(MEXICO CITY) - The eurozone has made substantial progress in fighting its debt crisis but more needs to be done, including building a stronger firewall, US Treasury Secretary Timothy Geithner said Saturday.
Speaking ahead of a meeting of G20 finance ministers and central bank chiefs, Geithner said countries should move "as quickly and as aggressively as possible to capitalize a financial system that is short of capital."
"Europe is making quite a bit of progress in convincing the world that they are not going to allow a catastrophic financial failure in the continent," he said.
"Now they are not done. They know have more work to do," added Geithner as he called for a "strong, more credible firewall."
If Europe could overcome its crisis, "then the world will not just be in a position where there will be less risk to growth globally but there will be more oxygen to deal with long-term questions," he said.
The eurozone has come under sustained pressure from other economic powers, including the United States, to boost its firewall to prevent the debt crisis spreading throughout the bloc.
The issue is likely to dominate the G20 meeting in Mexico and a summit of EU leaders in Brussels on March 1 and 2.
Most eurozone countries are in favor of combining the present temporary bailout fund, the EFSF, with a more permanent pot, the ESM, to give the bloc a potential war chest of 750 billion euros.
However, EU paymaster Germany, where voters are weary of providing more cash to what they see as profligate neighbors, has said that improved market conditions mean boosting the fund is not a priority.
"It's important to give Europe's leaders credit for the scale of what they have accomplished," said Geithner.
"It's important though not to rest on that progress and to recognize that that progress is there in part due to the expectation that here are more things to come, namely creating a firewall and making it credible," he said.
Europe in turn, has pressured those from outside the bloc, such as China, Japan and the US, to pour in more cash to the IMF to aid the eurozone.
IMF head Christine Lagarde has called for member countries to contribute some $500 billion to the fund's coffers to lend to crisis-hit nations.
But Washington has steadfastly resisted this pressure, arguing that the eurozone has sufficient resources to deal with the crisis.
Geithner said he was "very confident" that the world would provide the IMF with sufficient resources to deal with crisis as they arose.