WASHINGTON (MNI) – The following is a transcript of U.S. Treasury
Secretary Tim Geithner’s comments Sunday in a BBC Radio 4 “Today”
program interview:

GEITHNER ON THE SITUATION IN EUROPE: I think you are right this is
much bigger issue than simply Greece at the moment. It’s gone well
beyond that and that is why it is proving so damaging to confidence
globally.

I think what the European leadership is trying to do is build in
place a basic framework for fiscal restraint across the union to
complement the instruments of monetary union; to build a framework of
financial tools to complement monetary union and to make sure they have
a financial capacity to backstop, reinforce the reform efforts, efforts
to restructure, recapitalize financial systems which are going to have
to happen. They are trying to build those institutions.

That is an enormously complicated task to do in normal times, much
less in crisis. They have 17 governments trying to resolve their
difficult politics. So all of us who look at Europe going through this
have to have admiration for what they are trying to do and recognize the
difficulty of it but also help them understand that markets are moving
much more quickly than they are moving, and these things have the
classic dynamic that the longer you wait the harder it is to solve, the
more expensive it is to solve, and there is a huge premium on early
action.

I think a necessary condition for confidence is to see governments
and the central bank, particularly working alongside each other, not at
cross purposes, and the absence of that has undermined what they’ve been
trying to build in that context. So obviously, I think they are aware
that they have got to move and we all have a big stake in them doing
that.

GEITHNER ON THE ECB: I’m tremendously impressed with the force and
creativity of the actions they have taken so far and they’ve been
substituting for the actions of government. And one of the reasons why
it is so important for the governments to escalate is so that they do
not leave the central banking carrying too much of the burden of
responding to a crisis in this context.

What we did in the United States was to — not, not right away; it
took us a bit of time — but we got a framework in place where we worked
very carefully alongside the central bank and make sure that the fiscal
authorities were absorbing the risk in the central banks actions, so
that they were free to help resolve our crisis without calling into
question their basic core mandate.

So I think what the ECB is doing is essential, it is going to be
essential for a long period of time. But ultimately what we need is
governments stepping in and making sure they are underwriting,
protecting the role, the risk that the ECB has had to take on.

** Market News International Washington Bureau: 202-371-2121 **

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