Treasury Secretary Timothy Geithner told European governments on Saturday to eliminate the threat of a catastrophic financial crisis by working more closely with the European Central bank to boost the continent's bailout capacity.
Geithner said fiscal authorities should team up with the ECB to ensure that euro-area governments with sound policies have access to affordable financing and to ensure that European banks have adequate capital and liquidity.
The threat of cascading default, bank runs, and catastrophic risk must be taken off the table, as otherwise it will undermine all other efforts, both within Europe and globally. Decisions as to how to conclusively address the region's problems cannot wait until the crisis gets more severe, Geithner said.
(Reporting by David Lawder)