First signs of growth visible in global economy: Geithner

Last Updated: Thursday, September 3, 2009 - 08:03

Washington: The steps taken by the G-20
have helped the recovery of the global economy and the "first
signs of positive growth" are visible, US Treasury Secretary
Timothy Geithner has said, even as he warned that there is
still a "long way to go".

"We have come a very long way, but I think we have to
be realistic that we`ve got a long way to go still," Geithner
said in his interaction with reporters in advance of the G-20
Finance Ministers meeting in London this week.

"You`re seeing now the first signs of positive growth
now in this country and countries around the world. There has
been a dramatic improvement in basic confidence and stability
in financial markets, reflected in substantially lower
borrowing costs. And those are very important achievements."

Our emphasis is going to be on trying to make sure
that everyone understands that our basic imperative is to make
sure we have the foundation in place for a self- sustaining
recovery led by private demand, and that`s going to require
more work, he said.

Geithner said the actions taken by the G-20 have been
very successful in help pull the global economy back from the
edge of the abyss and providing greater stability and
confidence to the financial markets.

The Treasury Secretary said it is very important to
continue to reinforce the initial signs of progress that is
being experienced.

"That is going to require a sustained commitment to
this very effective -- same bear-market policies we had in
place, monetary, fiscal, financial, to help arrest what`s been
the most serious economic crisis we`ve seen in generations,"
he said.

As part of the growth agenda, Geithner said: "We will
begin to try to shift the focus to some of the longer-term
challenges."

First of these challenges are structural challenges in
improving quality of education outcomes, reforming health-care
systems, lowering the rate of growth in health-care costs,
improving energy efficiency, improving quality of public
infrastructure. Those changes are very important to the
long-term productive potential of the economies, he argued.

"The countries around the table at the G-20 face a
somewhat different mix of challenges -- many similar
challenges. Making progress on those as we address the
immediate crisis is important to broader confidence. It`s
again, it`ll be important to make sure that we come out of
this with a more durable, sustained recovery," he said.

Geithner said the world as a whole is going to require
a shift in the competition and growth outside the United
States to stronger domestic-demand-led growth.

Referring to the upcoming G-20 meet, Geithner said: "A
critical priority for us is going to be to -- and I know that
view is shared around the table at G-20 -- is to try to make
sure that you are seeing enough progress at a sufficiently
ambitious level across the major financial centres, so we are
left with a more conservative set of standards applied more
evenly, more uniformly, around the world."

He said: "We are going to be outlining a framework of
principles to begin the discussion -- not to reach agreement
on, but to begin a framework or discuss a framework of
principles on a new international capital accord that will put
in place -- again, once the crisis is behind us -- a more
conservative framework of constraints on leverage in the
financial sector across the major, globally active financial
institutions."

A critical part of making the financial system more
stable in the future and reducing the risk being faced in the
future again a situation where the prospects of failure of
large, individual institutions can threaten the overall
stability of the financial system.

"That`s not something that we can accept. A critical
part of preventing that in the future is to know that the
system will require more conservative, carefully designed,
comprehensive standards for capital and liquidity management
for these major institutions," Geithner said.

Bureau Report



First Published: Thursday, September 3, 2009 - 08:03

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