U.S. Treasury Secretary Timothy Geithner said on Thursday there was a very encouraging improvement in confidence in the financial system.

After meeting with French Economy Minister Christine Lagarde in Paris, Geithner also told reporters that markets were functioning better, which he saw as a good sign for the economy. I think generally what you're seeing in the United States is a very encouraging improvement in confidence in the overall stability of the financial system, Geithner told reporters.

He said markets themselves were also showing signs of improvement.

You're seeing markets start to function better, you're seeing risk premia reduced. That is a fundamentally good thing, a sign of success in our collective efforts to address the crisis, he said.

In a separate television interview on Thursday, Geithner reiterated his belief that there were signs of a durable improvement in credit markets.

We are not going to have a strong durable recovery unless we have a financial system that's able to provide the credit necessary for businesses. We have made a lot of progress, he told Bloomberg television.

Asked about threats to finance company CIT (CIT.N), Geithner gave no direct answer, saying the administration was working to repair the broader financial system.

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