The global recovery had enough momentum before Europe's debt crisis struck to be able to weather it without being derailed, Treasury Secretary Timothy Geithner said on Thursday.
He also maintained that the United States, having acted early on broad financial reforms, had a banking system that was much better capitalized than others and said that put the United States in position to tell Europe how to tighten up on risky lending.
In an interview on CNBC television from Alaska, while en route to a Group of 20 meeting in Busan, Korea, on Friday and Saturday, Geithner played down fears Europe's woes will drag down U.S. and global growth.
We have a moderate but pretty solid recovery in place he said. The world economy came into this period of concern about Europe with stronger underlying momentum and growth than many people expected, and we're in a much stronger position to get through this.
Geithner said finance ministers and central bankers heading for the G20 session share a commitment on the need for setting common standards across global financial markets that will constrain some of the risk-taking that helped fire the 2007-2008 U.S. financial crisis.
RISK HAS NO RESPECT
Risk doesn't respect national boundaries, it's going to move to where the constraints are weakest, he said.
We all have an important stake in making sure we have a strong set of consistent standards in place across these global markets, across these global institutions and what we're going to try to do in Korea is to try to make sure ... we're solidifying that consensus, Geithner added.
While the U.S. Treasury chief has resisted suggestions that the Obama administration has a set of prescriptions for Europe to follow, Geithner was straightforward in saying that the U.S. response to crisis was faster and more broad-based than Europe's has been so far.
U.S. firms come into this -- because of the actions we took early in our crisis to recapitalize the financial system -- with much stronger capital positions than is true for most of their competitors around the world, he said.
So I think the U.S. is in a very strong position ... to lead the world to much better-designed, more conservative constraints on risk-taking, including constraints on leverage, Geithner added.
CONTINUING A DEBT TOUR
The U.S. Treasury chief visited Britain and Germany last week en route home for a trip to China, discussing Europe's debt crisis with finance ministers and central bankers in London, Frankfurt and Germany.
There is concern that Europe's banking system is at risk because it holds much of the debt issued by the most indebted euro zone members like Greece, Portugal and Spain.
In response to a question about Friday's scheduled Labor Department report on May employment, Geithner said broad measures of U.S. economic activity show a gradual improvement in confidence that will eventually mean more hiring. But he did not say what he expected from the report.
Analysts surveyed by Reuters are forecasting 513,000 new jobs were created last month.
(Reporting by Glenn Somerville and Emily Kaiser; Editing by Kenneth Barry)