U.S. Treasury Secretary Timothy Geithner said on Wednesday that the global economy faces significant risks at the moment with the ongoing crisis in Europe and slowed growth in many major economies.
"It is still very challenging moment for the global economy,"
Geithner spoke to the Council on Foreign Relations, a Washington-
based think tank.
"Europe is in the next stage of another major escalation" in
their strategy to contain the crisis and build a stronger Europe,
Geithner said.
He believed a banking union -- a commitment to a more integrated
framework for supervision, for deposit insurance, and broader
backstop of the financial system -- is one important policy change
Europe needs in the near term. He deemed Spain's decision for more
dramatic recapitalization of its banking system is "a good, concrete
signal" toward broader banking union.
The Treasury Secretary said it is also important for Europe to
have credible financial backstop in place for the countries that are
undertaking reforms, by enabling them to borrow at affordable rates.
Meanwhile, Geithner mentioned the steps the debt-laden European
countries can take to shift toward growth. He said the world would
have a chance to hear what the European countries plan to do next at
the upcoming group of 20 summit to be held in Los Cabos, Mexico, on
June 18-19.
Geithner gave little details about his own view of the U.S.
economic outlook. He said many forecasters predicted the growth
would struggle around 2 percent.
"That growth is not strong enough to make a lot more progress
getting more Americans back to work and bringing down the
unemployment rate faster," he said, adding that if more things could
be done, the United States would be in a stronger place to withstand
the uncertainty caused by the protracted crisis in Europe.
