US confident in EU measures to stabilize euro currency

Mar 8, 2011, 16:29 GMT

Berlin - US Treasury Secretary Timothy Geithner on Tuesday expressed confidence in European Union (EU) measures aimed at shoring up confidence in the euro.

Speaking following talks in Berlin with German Finance Minister Wolfgang Schaeuble, Geithner also said the global economy was gradually recovering.

The Treasury Secretary said he was convinced the European authorities would strike 'the right balance between support for the reform programmes that are necessary to address their problems' and the type of financial support necessary to make those reforms work.

Geithner went on to praise what he described as the 'incredibly difficult reforms' that European governments were undertaking.

He said the EU was doing a 'remarkable' job of forging mechanisms to manage future economic problems.

'I think there is a broader recognition across Europe that, for those reforms to work, they need to be supported by carefully designed conditional financial systems,' Geithner said.

Leaders of the 17-member eurozone are due to hold meet on Friday as part of efforts to overhaul their economies to enable them to compete more with global rivals such as the US and China.

The leaders are also set to debate plans to set up a permanent bailout system for eurozone countries which run the risk of bankruptcy.

Both Greece and Ireland were forced to turn to tap the bailout fund as a result of the debt crisis that engulfed the currency bloc last year.

The bailout fund and boosting international competition in the currency bloc have pitted northern and southern eurozone states against one another.

While a number of northern countries such as Germany are pushing for tough austerity measures and strict conditions for any future bailouts, southern states like Greece are demanding more flexibility and more public support for businesses.

At their meeting Tuesday, Geithner and Schaeuble also addressed financial market regulation within the framework of the Group of 20 (G20) leading economies. They also discussed possible sanctions against Libya and the situation in Iran.

In particular, Schaeuble warned that the global financial crisis meant that consideration of market regulation issues had to continue.

Earlier in the day, Geithner met with European Central Bank chief Jean-Claude Trichet and with Axel Weber, the departing head of Germany central bank, the Bundesbank.

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