U.S. Treasury Secretary Timothy Geithner and German
Finance Minister Wolfgang Schaeuble called on European states Monday
to press on with economic reforms to help resolve the region's
financial crisis and bolster confidence in the euro.
After talks with Schaeuble on the northern German holiday island of Sylt, where the finance minister is holidaying, Geithner travelled to Frankfurt for a meeting with European Central Bank (ECB) chief Mario Draghi.
In a joint statement, Schaeuble and Geithner said they "took note of statements from European leaders last week to take whatever steps are necessary to safeguard financial stability in the euro area."
Geithner's visit to Germany came as a top European official said the 17-member eurozone had reached a critical point in its battle to overcome the debt crisis and that leaders would now work with the ECB to stabilize the euro.
In a series of newspaper interviews, eurogroup head Jean-Claude Juncker said European leaders would decide in the next few days on measures aimed at stemming high borrowing costs in nations at the centre of the crisis, notably Spain.
"There is no time to lose," said Juncker, who is also Prime Minister of Luxembourg."We have come to a crucial point," he told French daily Le Figaro. The eurogroup comprises eurozone finance ministers.
But in their statement, Schaeuble and Geithner stressed the progress that individual nations had made in facing up to the crisis.
"Both expressed confidence in euro area member states' efforts to reform and move towards greater integration," the statement said.
Schaeuble and Geithner also welcomed Ireland's return to government bond markets and Portugal's success in knocking its finances into shape.
They also "discussed the considerable efforts undertaken by Spain and Italy, to pursue far-reaching fiscal and structural reforms," the statement said.
In his media comments, Juncker made reference to the ECB and the euro bailout fund, the European Financial Stability Facility (EFSF), working together.
Media reports suggested that the ECB would link up with the EFSF to bolster the eurozone, possibly by buying the bonds of heavily indebted states such as Spain and Italy.
But a European Commission spokesman said Monday, "there are no requests as of today" for activating bond-buying by the euro rescue operations.
In the meantime, as a reminder of the bleak state of the eurozone economy, the European Commission said its closely watched Economic Sentiment Indicator for the region fell for the fourth consecutive month in July.
"Today's dismal figures only increase the pressure on European policy makers to act decisively to stop the rot in the eurozone," said ING Bank economist Peter Vanden Houte.
Geithner's talks with Draghi come in the buildup to a key meeting of the ECB's governing council on Thursday.
Market expectations have been rising that the ECB is planning new action to head off the crisis, which is now in its third year.
This follows a speech by Draghi on Thursday when he insisted that the ECB would do all that is necessary to preserve the euro.
However the ECB said Monday that, once again, it had not made any government bond purchases last week. The ECB's bond purchasing programme has been on hold since the middle of of March.
In the meantime, Spain's bond yields have soared to record highs amid concerns that the eurozone's fourth-biggest economy will be forced to tap Europe's bailout fund for a sovereign debt rescue.
Geithner's talks with Schaeuble and his visit to the ECB also followed concerns that the eurozone debt crisis is undercutting the economic recovery in the US, which in turn poses a threat to US President Barack Obama's re-election chances in November.
Draghi's remarks last Thursday sparked a market rally, which continued into this week with shares across Europe rising Monday and bond yields slipping.
Italy's borrowing costs fell, at bond auctions totalling 5.48 billion euros (7.16 billion dollars), on hopes of new ECB action to resolve the eurozone debt crisis.
Meanwhile, the eurozone's blue eurostoxx 50 ended the session 1.7-per-cent higher at 2340 points. However, the euro slipped back 0.4 per cent to 1.2247 dollars.
Draghi's comments were followed by coordinated comments from European political leaders aimed at easing market tensions.
German Chancellor Angela Merkel interrupted her vacation in the Alps bordering Austria and Italy to issue joint statements first with French President Francois Hollande and then with Italian Prime Minister Mario Monti, echoing the ECB chief's remarks.
Most Popular Stories
- Homeowners More Satisfied With Mortgage Servicers
- Discounts Help U.S. Auto Sales Sizzle in July
- Russia, Ukraine Now Face Off Over Football Clubs
- Colorado Issuing Immigrant Driver's Licenses
- Recruiting and Keeping the Perfect Employee
- MassMutual Teams Up With ALPFA
- Chrysler U.S. Sales in July Hit 9-Year High
- Fiat Looks Abroad After Chrysler Merger Vote
- Dow Wipes Out Gains for the Year: What Happens Now?
- House Shelves Immigration Bill, Goes on Vacation