Geithner backs EU crisis plan, stresses ECB role

Tue Dec 6, 2011 4:07pm EST
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By Luke Baker and David Lawder

BRUSSELS/BERLIN (Reuters) - Treasury Secretary Timothy Geithner threw his weight on Tuesday behind a Franco-German plan to tackle the euro zone's sovereign debt crisis and said the European Central Bank had to play a major role in any solution.

Geithner offered his support after Standard & Poor's agency fired a second warning shot at the bloc in 24 hours by threatening to cut the credit rating of its rescue fund.

German Chancellor Angela Merkel and French President Nicolas Sarkozy want to change the EU treaty to impose mandatory penalties on euro zone states that exceed deficit targets, aiming to restore market trust and prevent the crisis spiraling out of control.

Geithner said he was encouraged by moves towards "fiscal union" - under which euro zone states would obey a common set of tight budget rules - and stressed the central role in tackling the crisis of the ECB, which has been reluctant to take decisive steps until governments get to grips with their budget problems.


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