G20 'reassured' by European stabilisation plans: Lagarde

4th June 2010, Comments 0 comments

French Economy Minister Christine Lagarde said Friday the Group of 20 was "reassured" by European plans to shore up financial stability in the eurozone.

Lagarde was speaking after G20 finance ministers began two days of talks aimed at preserving a fragile global recovery in the face of the eurozone debt crisis.

"I felt that our partners were somewhat reassured by the mechanisms we put in place," she told reporters, adding that US Treasury Secretary Tim Geithner had been impressed by the pace of the plan's deployment.

However, markets remain ruffled despite the European Union's move to craft a 750 billion-euro (913 billion dollar) rescue plan and a European Central Bank effort to buy the bonds of troubled markets.

The G20 meeting sees ministers from the world's leading economies engaged in a delicate balancing act of continuing to stimulate a recovery while also reining in massive deficits in some member nations.

"Fiscal consolidation is the number one priority" for the meeting, said Lagarde, although "some minority voices insist on the need for growth."

She added: "It is necessary to carry out three things simultaneously: maintaining growth, fiscal consolidation and reforms."

Officials have said the G20 meeting, in preparation for a Toronto summit on June 26-27, was unlikely to reach a conclusion on tighter banking regulation or on a proposed bank levy amid divisions over the pace and scale of implementation.

A global banking tax is supported by European powers including France and the United States but some developing nations as well as Canada and Australia argue that they should not have to pay to clear up a mess they did not create.

"I hope we will reach a consensus on principles. But as for the timing we will see," said Lagarde, adding that it was "an open secret" that Canada and Australia would not be willing to be rushed into any kind of reform.

© 2010 AFP

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