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Geithner confident EU will resolve crisis, yuan will rise

US Treasury Secretary Timothy Geithner said he is confident Europe will resolve its debt crisis and that the US economy can withstand any fallout, Bloomberg reported.

business Updated: May 16, 2010 09:49 IST

US Treasury Secretary Timothy Geithner said he is confident Europe will resolve its debt crisis and that the US economy can withstand any fallout, Bloomberg reported.

Geithner also said he was "confident" China would allow the value of the yuan to rise against the dollar. He underlined that seeking "a level playing field" for US exporters would be at the centre of Washington's agenda in talks with Beijing later this month.

"Europe has the capacity to manage through this," Geithner said in an interview on Bloomberg Television that was scheduled to be aired this weekend. "And I think they will."

He said Europe was "committed to fix this problem".

Last week, the EU, IMF and central bankers put together a $1 trillion rescue package to stabilise world markets and prevent the Greek debt crisis from destroying the euro currency.

Financial markets have been troubled since though on concerns that the austerity measures needed to bring some euro area budget deficits back under control could derail economic recovery. The euro <EUR=> fell on Friday to an 18-month low.

Geithner said the $1 trillion package was an "enormously important step" and he didn't think the European turmoil would hurt US growth.

"Our economy is getting stronger. We're seeing a lot of strength, improvement and confidence," he said.

He said the US economy was recovering from the global crisis "more quickly and stronger than many people expected. We can take a lot of comfort and encouragement from the signs of strength that we're seeing here in the United States."

Geithner is due to meet Chinese Vice Premier Wang Qishan in Beijing on May 24-25 as part of regular dialogue between the two countries.

"It is in China's interest that they move to let their exchange rate start to gradually reflect market forces," Geithner said. "I'm confident they're going to do that."

China has shackled the yuan at around 6.83 per dollar since the middle of 2008 to help shield its economy from the global downturn.

But lawmakers in Washington have criticised Beijing for the policy, saying it gives Chinese firms an unfair export advantage and costs Americans jobs. Some Western economists argue the currency is as much as 40 percent undervalued.

Geithner praised Senate legislation to overhaul financial regulation aimed at preventing a repeat of the US financial meltdown in 2008, Bloomberg said.

"It's time to get this done. We want to bring it to earth now so that we can get on to other challenges," Geithner said.

He promised the Treasury would move quickly after the financial bill passes to build consensus on how to reform mortgage-financing companies Fannie Mae and Freddie Mac.