Billionaire investor George Soros said on Wednesday European governments will have to cut services to bring down deficits, but the crisis has calmed.

In an interview with CNBC television, Soros said: European governments don't have the option of declaring bankruptcy. Overall (in Europe), it's not that bad, there's growth.

Germany has served as a strong buffer during the crisis, Soros noted, and is speeding ahead.

But while there is growth in Germany, he said it all has to do with the euro crisis, which is in process of being resolved, but it will result in a two-speed Europe.

The euro has rebounded in recent weeks. On Wednesday, the euro rose to $1.3723 on trading platform EBS, its highest since November 22, before dipping back to $1.3691.

He also said the introduction of the European Financial Stability Facility (EFSF) reflects officials commitment to preserve the euro.

The 440 billion euro ($600 billion) EFSF was set up in May last year after a crisis in Greece to help any heavily-indebted euro zone member state unable to raise funding in the market.

Meanwhile in the United States, Soros said states would not be allowed to go bankrupt. Instead, he believes investors should be careful when bottom-fishing for battered municipal bonds as selling pressure continues to push prices lower.

Funds investing in muni bonds have recorded more than $20 billion in outflows during 10 straight weeks to January 19, according to Lipper.

(Editing by James Dalgleish, Gary Crosse and Jennifer Ablan)