Treasury Secretary Timothy Geithner urged his Group of 20 counterparts to keep stoking global growth to counteract Europe's woes and put the onus on China, Germany and Japan to boost domestic demand.
In a June 3 letter released on Saturday as a G20 gathering of finance ministers and central bankers got underway, Geithner urged policy makers of the world's leading developed and emerging economies to safeguard recovery and strengthen prospects for growth.
The G20's strong policy response to the crisis has played a pivotal role in restoring economic growth, but concerns about growth as Europe makes needed policy adjustments threaten to undercut the momentum of the recovery, he wrote.
Full implementation of Europe's $900 billion backstop for government debt would limit the risks to global recovery.
But we all have a strong interest in working to reinforce the ongoing recovery in private demand, he added.
While the U.S. Treasury chief said it was important to put in place credible commitments to restore fiscal sustainability over the medium term, he put it fourth in his list of priorities for the G20 meeting and repeated that such policies should be growth-friendly.
Higher priorities included enhancing the role of internal demand in surplus economies that now rely heavily on exports. He urged progress on rebalancing global demand away from the United States as the key consumer of the world's exports, in keeping with G20 pledges made last year at a meeting in Pittsburgh.
The necessary shift toward higher savings in the United States needs to be complimented by stronger domestic demand growth in Japan and the European surplus countries and sustained growth in private demand, together with a more flexible exchange rate policy, in China, Geithner wrote.
Geithner urged the G20 ministers and central bankers to accelerate progress on financial reforms, including a new framework for bank capital requirements. He said details on this -- including specifics on overall capital and leverage ratios, the length of a transition period and liquidity requirements, should be finished by the November G20 leaders summit in Seoul.
He mentioned last, the controversial issue of a bank levies, saying that the G20 needs to move forward on the emerging framework for managing the failure of large global financial institutions, including principles for how to cover the financial costs of financial crises.
Earlier this week, he said there was little prospect for an agreement on a bank levy among the G20, where views differ widely on their need and on the methods under which they would operate.
(Reporting by David Lawder, editing by Jonathan Thatcher)