Treasury Secretary Jacob J. Lew urged European leaders to move toward a full banking union and said some countries still need to adopt market-determined exchange rates.
Europe’s economic recovery “remains weak, unemployment is high and fiscal contraction along with deleveraging in the banking and business sectors will continue to act as headwinds to growth,” Lew said in a statement to the International Monetary and Financial Committee during the IMF’s meetings in Washington today.
The global economy “faces headwinds from fiscal drag, private sector deleveraging, and inadequate global rebalancing,” Lew said. For the U.S., “our work begins at home.” He reiterated the Obama administration’s position that the government shutdown must end and the federal debt limit needs to be raised.
In Europe, “further progress is also needed in moving toward a full banking union, which includes not only a single supervisory mechanism but also resolution authority, recapitalization capacity, credible deposit insurance, and some degree of risk-sharing among members.”
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