WASHINGTON - Treasury Secretary Timothy Geithner said on Tuesday the main goal of this weekend's meeting of Group of 8 finance ministers is to take stock of efforts to stimulate economies and stabilize financial systems.
Geithner told a briefing that efforts to ensure an economic recovery takes hold are still the dominant preoccupation of policy everywhere despite signs that the economic crisis may be starting to ease.
Geithner will meet with his counterparts from the Group of Eight top industrial countries in Lecce, Italy, on Friday and Saturday. The ministers will to try to build consensus for financial reforms ahead of a G8 leaders' summit in Italy in July.
Geithner said he would discuss the U.S. experience with stress-testing the capital levels of banks, but did not plan to judge other countries' standards for examining their banks.
Mostly what I'll do is explain what we've done here, and I'd expect they will do the same, he said.
They're going to make different judgments than we are partly because they are going to have different systems, different constraints and different opportunities and what matters to all of us, are they going to achieve enough? That's the standard we should be held to and that's the standard that I think we'll hold them to,
Geithner said he will underscore that the tests of the top 19 U.S. banks provided a level of disclosure and clarity that has improved confidence in the U.S. financial system and attracted private investment flows into bank shares.
Canadian Finance Minister Jim Flaherty said earlier that the G8 ministers would continue to apply pressure for stress testing at the weekend talks.
Edwin Truman, who until recently was an adviser to Geithner on international issues, said he believed it would be useful for Geithner to discuss the benefits of the stress tests and how they could be applied to European countries.
It's not wise to go around finger pointing, but it's fair to say that we think what we did was beneficial and we learned a number of lessons from that, said Truman, a senior fellow at the Peterson Institute for International Economics in Washington.
Geithner said he believed the appetite for regulatory reform among his G8 counterparts had not been diminished by signs of stabilization. The Obama administration on June 17 is expected to unveil legislative proposals for sweeping new rules aimed at preventing future financial crises.
One reason we want to move quickly is that we don't lose the motivation for reform that's provided by the...knowledge of the extent of the damage from basic failures of the current system, he said.
Geithner believes the Treasury has a lot of support among U.S. lawmakers, among the financial community to reform the core of problems that made the U.S. system vulnerable. He said he plans to discuss these issues with his counterparts.
Regarding rising concerns about deficits, he said he will reiterate the Obama administration's views that stimulus actions are necessary temporary (and) would be reversed as soon as a foundation for recovery was put in place.
(Editing by Leslie Adler)