Treasury’s Brainard Urges Completing Euro-Region Overhaul
Lael Brainard, the U.S. Treasury Department’s chief international official, said Europeans are moving with a heightened sense of urgency to resolve their debt crisis and called for completion of financial backstops.
“Euro-area authorities are continuing to make their financial backstops credible and effective in the face of market pressures,” Brainard said at a Women’s Foreign Policy Group event today. “It is important that countries such as Spain and Italy have sustainable borrowing costs as they undertake ambitious fiscal and structural reforms over several years.”
Brainard, the Treasury Department’s undersecretary for international affairs, urged the 17 nations that use the euro to complete the terms of support for the restructuring authority to strengthen Spain’s banking system.
As concern mounts over their banking systems and finances, Spanish and Italian leaders have added their voices to those calling for more decisive action, a counterpoint to Germany’s more incremental approach to solving the 2 1/2-year-old crisis. European Union leaders will attend pre-summit meetings as they work to narrow differences before the June 28-29 gathering in Brussels.
“In the days and weeks ahead it will be critical to see actions to address near-term stresses while laying a path to greater financial and fiscal union, necessary complements to monetary union,” Brainard said.
She also urged lengthening the time frame for some of the reforms.
“There may be greater willingness to stretch out fiscal adjustment over a more appropriate time frame, recognizing the dangers posed to both growth and fiscal performance of contracting too sharply into a downturn,” Brainard said. “The new government in Greece and the troika have stated their intention to work out a path to reform and sustainability within the euro area.”
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