Geithner pushes European leaders to resolve region’s debt problems
Washington, D.C., United States (AHN) – U.S. Treasury Secretary Timothy Geithner pushed European leaders to solve the region’s worsening debt problem. He urged the leaders to move swiftly because the crisis is starting to impact other countries as distant as China, Brazil, India and Korea.
Leaders of the 17-member eurozone have drawn up a rescue plan they intend to implement within the next five to six weeks, including a possible 50 percent write-down of Greek debt and quadruple the bailout fund.
Finance and central bank heads are gathering next week to discuss their next steps and to decide if they will extend another aid to Athens to prevent a default, which would have a domino effect on European banks that hold the bulk of Greek bonds.
The biggest holder are German banks, which is why Greek Prime Minister George Papandreou will hold a meeting with German Chancellor Angela Merkel to tackle Greece’s progress in reducing its budget deficit.
Merkel has proposed placing a firewall around Greece to prevent the cascade of market attacks on other European nations.
Some eurozone members, however, are against boosting the European Financial Stability Facility. German Finance Minister Wolfgang Schaeuble said on Monday that while Germany is willing to provide the region’s leaders with tools to address the debt contagion, Berlin has no plans of approving an increase in the bailout fund.
Geithner warned European leaders that they have some time, but not very much time on their hands to act swiftly. He said at the International Monetary Fund and World Bank meeting that the Greek debt-led turmoil is threatening to result in defaults cascading, banks suffering runs and catastrophic risks spreading globally.
Japanese Finance Minister Jun Azumi joined Geithner in urging European leaders to implement the July plan to expand the EFSF. He added that Tokyo is considering increasing its support for Europe through a regional bond fund if the nations would implement their promised fiscal measures.
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