Geithner backs Germany on EU reform

(WASHINGTON) - US Treasury Secretary Timothy Geithner has endorsed Germany's call for structural reforms to save the crisis-hit eurozone.

At an event at the Council on Foreign Relations late Wednesday, Geithner waded into the debate over how to shore up the eurozone after a Spanish bank bailout fell flat, saying Germany's position was "very reasonable."

"What Germany is saying is (that) to make monetary union work, (they're) prepared to put a substantial commitment of resources behind this broader endeavor," Geithner said.

"But for that to work, (it) needs to be in support of reforms and changes in the institution ... and that is a very reasonable position."

He went on to say that at next week's G20 summit in Mexico all eyes would be on Germany and other "major players" to clarify proposals for a European banking union and other measures to tame the crisis.

Fears for the eurozone have mounted since Spain at the weekend became the fourth country to receive rescue funds -- following bailouts of Greece, Ireland and Portugal -- after its European partners agreed to a 100 billion euro ($125 billion) lifeline for its banks.

Europe's paymaster Germany is proposing eurozone structural reforms ahead of a European Union summit during where it is expected to again clash with France over how best to deal with the crisis.

Germany champions fiscal discipline first, while France's new Socialist President Francois Hollande is pushing for growth measures.

Greeks meanwhile return to the polls on Sunday for a second time in six weeks in parliamentary elections that could see the triumph of parties opposing an unpopular EU-IMF bailout deal.

The deal imposed tough austerity measures in return for money to avoid default and if a new Greek leadership rejects it, Greece could become the first country to leave the eurozone.

After the rescue lifeline for Spain, the eurozone's fourth-largest economy, all eyes are now on Italy, the third largest euro country and the next in the firing line of the creeping debt crisis.

EU leaders gather for their next summit on June 28-29 in Brussels.