BERLIN — The United States and Europe broadly agree on the need for reform of the financial system, but global cooperation is needed, U.S. Treasury Secretary Timothy Geithner said Thursday. He also said countries are working together to balance cutting back deficits with supporting economic growth.
Geithner met with German Finance Minister Wolfgang Schaeuble during a two-day visit to Europe that also took him to Britain and to the European Central Bank in Frankfurt.
The trip comes amid ongoing market volatility following European nations' agreement this month on a nearly $1 trillion loan backstop for governments in danger of defaulting on debt — coupled with efforts to cut budget deficits.
Germany, which has the eurozone's biggest economy, pushed that deal through Parliament last week. Geithner welcomed Berlin's leadership role in putting together "this very strong framework," as well as its speedy action to implement it.
He deflected worries that austerity measures could lead to an economic setback. He underlined the need to reduce debt "to sustainable levels over the medium term" and added that "we're going to get there at somewhat different paces."
The eurozone rescue package — preceded by a rescue for Greece that remains unpopular in Germany — has been accompanied by renewed European determination to advance regulatory reform of the financial system. Many on the continent contend that speculative market practices exacerbated the debt crisis.
Last week, European Union governments overrode British objections and U.S. worries to tighten rules for hedge funds, and Germany unilaterally announced curbs on traders of government debt and bank stocks — a move that rattled markets.
Geithner accentuated areas of trans-Atlantic agreement but stressed the U.S. commitment to a "cooperative global approach" leading up to next month's summit of the Group of 20, which combines rich countries with emerging nations such as China and India.
Geithner acknowledged that "we're going to have slightly different approaches because we have different systems."
He didn't comment directly on the German ban on so-called naked short-selling and planned legislation to cement it into law.
Schaeuble renewed his defense of the move, saying it was justified given recent months' experiences and could be superseded by future European regulation.
One area of agreement is the need for a levy on major banks to ensure that they cover the costs of any future banking crisis.