Europe in the spotlight at weekend G20 talks
The United States will use a finance ministers’ meeting in Paris this
weekend to ratchet up pressure on Europe to deal with its debt crisis
swiftly before it derails a fragile global recovery, a top US Treasury
Department official said on Wednesday.
Speaking ahead of a Group of 20 finance chiefs’ meeting on Friday and
Saturday, Under Secretary for International Affairs Lael Brainard said
the meeting was likely to be ‘tightly focused’ on how to strengthen
“Against a backdrop of elevated risks to the recovery, the United
States will intensify our call for resolute action,” Brainard said,
adding that Europe “presents the most serious risk to the global
The United States and other nations have grown increasingly impatient
as Europe has struggled for agreement on how to prevent a debt crisis
that first struck peripheral nations from spreading to larger, more
Brainard, in a relatively rare on-the-record briefing by the US
Treasury’s top diplomat, warned the delay was putting the global economy
“Restoring financial stability will depend on accelerated and
forceful solutions,” she said. “Fortunately Europe has the capacity and
the resources to resolve this challenge, but the consequences of delay
are growing and the calls for solutions are broadening.”
Slowing growth and slumping financial markets have created strain
within the Group of 20 rich and developing economies that makes up 85
percent of global output, in contrast to 2009 when the group launched a
coordinated stimulus to pull the world economy back from the brink.
Brainard said President Barack Obama had consulted British and French
leaders on the weekend and said she expected there would be ‘robust
discussion’ in Paris about Europe’s plans.
“We in the United States have a very significant stake. Europe’s
strength and stability matter greatly to the confidence of our own
consumers and financial markets and to our own recovery,” she said.
But she noted that emerging-market countries, like China, also have a
key role to play in helping rebalance growth and enhance chances for
“China and other emerging markets have a bigger role to play in
bolstering and sustaining global growth nations,” she said, adding
pointedly that “those with large current account surpluses have
substantial capacity to pivot more rapidly to a pro-growth strategy
driven by consumption.”
In an obvious reference to China, Brainard added that greater
exchange-rate flexibility was ‘a critical mechanism’ for that to occur.
She said that China has let its yuan rise in value by about 10 percent
since June 2010 but said the United States will keep pushing for faster
Brainard said the International Monetary Fund should play a more
forceful role in ensuring that nations permit exchange rates to adjust
as needed to avoid economic disruption and imbalances in trade.
Among measures needed in Europe, Brainard said it was vital that
policymakers take “steps to ensure that European banks have requisite
liquidity and capital to maintain the full confidence of depositors and
She added that recent liquidity measures from the European Central
Bank and discussions among European banking regulators regarding
stronger capital cushions showed they were working to improve standards.