Geithner urges EU act forcefully to contain crisis

Reuters News
Posted: Jul 18, 2011 10:28 AM
Geithner urges EU act forcefully to contain crisis

WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner on Monday called on European leaders to do more to contain the escalating debt crisis in Europe.

"What Europe obviously needs to do is to act more forcefully to contain the risk of an escalating crisis in Europe," Geithner told CNBC television. "They have the capacity to manage this in a way that does not add to the broader burdens of the global economy."

Last week, Europe's banking authority said that eight banks would have to raise more capital after failing a test of their ability to withstand a long recession.

But the so-called stress tests were criticized for not reflecting expectations that Greece will likely default on its debt in some form.

Geithner said EU leaders were taking steps to contain the crisis, such as making it clear they will stand behind their banking system and trying to take the risk of a disorderly default off the table completely.

But Geithner said more needed to be done.

"Those things are all constructive, but the world needs to see European leaders ... take advantage or put in place those additional changes that will help contain the risk of a broader crisis," he said.

(Reporting by Rachelle Younglai; Editing by James Dalgleish)