By Phillip Kurata
IIP Staff Writer
June 15, 2012
The Europeans “recognize they’re going to have to do a bunch more to … restore a bit of calm,” U.S. Treasury Secretary Timothy Geithner said June 13. “The world’s going to have a chance this Monday and Tuesday [June 18-19] in Mexico at the G20 meeting to hear from them where they plan to go next.” Geithner will accompany President Obama to the summit in Los Cabos, Mexico.
The treasury secretary said Europeans are considering three kinds of reforms to quell the financial crisis affecting the 17 economies in the eurozone:
• A banking union that would create a more integrated framework for bank supervision, deposit insurance and a “broader backstop” of the financial systems of Europe.
• A support system that would help countries grow their economies while restructuring their financial affairs. “The reforms are going to take time, and they will not work without the ability of these countries to borrow at affordable rates.”
• Investing in infrastructure development in the countries struggling economically. “They’re talking about mobilizing a larger scale of resources to support infrastructure, and allocating those to the countries in Europe where growth is weakest.”
Obama has called on European leaders to do more to overcome the crisis, which poses a threat to the world economy. Germany, the strongest economy in the eurozone, has advocated fiscal discipline and austerity measures to deal with the debt crisis. Others, such as France’s new president, Francois Hollande, are recommending an initiative to spur growth in the eurozone’s ailing economies.
This is the first G20 summit in Latin America. The summit host, Mexican President Felipe Calderón, has said that Mexico seeks not only to help find a solution for the economic emergency but also to draw up a long-term global development agenda.