Geithner, speaking in Berlin yesterday after talks with German Finance Minister, Wolfgang Schäuble, praised the commitment to fiscal programmes put in place by new governments in Spain, Italy and Greece, and said he was “very encouraged” by recent efforts to buttress the euro area. He welcomed “progress toward a fiscal compact for the eurozone”, echoing language used last week by European Central Bank President, Mario Draghi.
Geithner’s comments backing German Chancellor Angela Merkel and French President Nicolas Sarkozy were more upbeat than his recent remarks urging Europe to move faster. In a September trip to Europe, Geithner asked leaders to set aside their differences to excise “catastrophic risks” from markets, prompting European criticism of US debt levels.
“This of course will take time” and “a very substantial commitment and a sustained commitment of political will”, he told reporters. Financial crises are resolved when governments and central banks create “conditions that make it compelling for investors to take the risk involved in lending to governments and to banks”.
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