19 Sep 2011

EU ministers urged to stop infighting

10:58 am on 19 September 2011

US Treasury Secretary Timothy Geithner has warned European finance ministers to stop ''loose talk'' about divisions over how to solve the eurozone debt crisis.

At a closed meeting of eurozone finance ministers in Poland on Friday, Mr Geithner is reported to have told them that the divisions were very damaging.

Mr Geithner reportedly said:

''What's very damaging is not just seeing the divisiveness in the debate over strategy in Europe but the ongoing conflict between countries and the (European) Central Bank.''

He said that ''governments and central banks need to take out the catastrophic risk to markets''.

The BBC reports his presence at the meeting was measure of how concerned the US is about the danger of economic contagion from Europe's government debt and banking crisis.

Schnieder Foreign Exchange markets analyst Stephen Gallo says Mr Geithner's comments reflect the mood of the markets.

However, Austrian Finance Minister Maria Fekter objected to Mr Geithner's comments.

"I found it peculiar that even though the Americans have significantly worse fundamental (economic) data than the eurozone, that they tell us what we should do,'' she said.

According to Ms Fekter, Mr Geithner also called on eurozone nations to increase the size of the current 440 billion euro rescue fund, but German Finance Minister Wolfgang Schaeuble replied that it was unlikely that taxpayers would agree.

At the meeting, eurozone ministers delayed a decision on the next instalment of the bailout loan, worth 8 billion euro. A total of 110 billion euro was agreed in May 2010.

Instead, the ministers announced tougher economic governance rules which will make it easier for states to be punished for overspending.