Treasury Secretary Timothy F. Geithner said Europe’s plan for a banking union and fiscal reforms is a “promising strategy.”
“This broad framework offers a more promising strategy for addressing the crisis,” Geithner said today in a statement at the International Monetary Fund annual meeting in Tokyo. “However, what is important is how it will be applied in practice.”
Geithner has offered this week his strongest endorsements yet of the euro region’s plans for tackling the crisis that is undermining global growth. While attending the IMF and World Bank annual meetings, he said Europe has finally crafted a policy armory that’s robust enough to beat back the sovereign debt turmoil.
Geithner also said today that IMF quota reforms aim to create a formula that better “reflects countries’ weight in the global economy and would organically increase the voice of dynamic economies over time.”
The IMF failed to agree at its meeting on changes to voting that would give emerging economies greater clout at the institution, while vowing to have a deal in place by January. The IMF’s quotas determine how much member countries may borrow and their voting power.
On the U.S., Geithner said it should enact a fiscal plan that brings down the deficit and debt over several years while continuing to support jobs and growth in the short term. On China, he said the nation needs to do more to strengthen domestic demand.