European leaders ‘committed to doing what’s necessary’ to hold the eurozone together, says Tim Geithner
US treasury secretary Timothy Geithner has called on European leaders to do more to solve the region’s debt crisis, including lowering interest rates for those countries that are undertaking painful reforms.
Interviewed on Bloomberg TV in Los Angeles on Tuesday, Geithner said the eurozone had to take steps including “bringing down interest rates in the countries that are reforming and making sure those banking systems can provide the credit those economies need.”
Geithner was speaking a day after returning from Germany, where he held meetings with German finance minister Wolfgang Schäuble and with European Central Bank president Mario Draghi.
Draghi last week said that the central bank would do whatever it takes to preserve the euro, stirring speculation it might take more radical steps at a policy meeting on Thursday.
Geithner said Schäuble and Draghi had walked him through the plans that they were putting into place to try and solve the crisis.
“What you know, from what Europe has said, that they are committed to doing what’s necessary to hold the Europe Union together,” said Geithner. “I absolutely believe they have the means to do it.”
Geithner said past financial crisis showed that the longer it took to address the issues, the more they cost.
“I believe they understand that. That’s why they’ve signalled they are prepared to move further. Now again, this is going to take time,” he added.
Geithner also said there was more Congress could do to bolster growth in the United States.
“There’s a lot of things Congress can do, in the near term, not just in the long run, to make growth stronger,” he said.
Geithner said Congress should take advantage of record low borrowing costs to adopt measures to support the economy, which he said was growing at between 1 and 2%.
“We pay about 1.5% for a 10-year Treasury now, to borrow long-term now, because fundamentally people have faith in the ability of the US to solve its problems,” Geithner said.
“It’s sensible for us to take advantage of this moment to do things that will make the economy stronger.”
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