Geithner, Schaeuble emphasise need for cooperation for growth

International coordination is essential to achieve sustainable public finances and reduce global macroeconomic imbalances

The United States and Germany will continue to work together closely with their partners to stabilise the economies in Europe and around the world, US Treasury Secretary Timothy Geithner and German Finance Minister Wolfgang Schaeuble said in a joint statement.

The two ministers, who held an informal meeting on Germany's North Sea island of Sylt on Monday, "emphasised the need for ongoing international cooperation and coordination to achieve sustainable public finances, reduce global macroeconomic imbalances and to restore growth," it said.

The meeting took place in the backdrop of heightened speculation about Greece leaving the euro zone for failing to implement austerity measures and reforms agreed when it received a second 130 billion-euro bailout from the EU and IMF in March and the likelihood of Spain seeking a full-scale bailout on top of rescue loans up to 100 billion euros pledged 10 days ago to stabilise its ailing banks.

German Finance Ministry officials said the meeting was organised at the request of the US side. The US government has been putting pressure on its European partners to take additional steps to resolve the two-year-old euro zone debt crisis, which is now threatening to escalate.

Geithner and Schaeuble expressed optimism that reforms being implemented in several debt-laden euro zone nations will be successful and the 17-nation group will make further progress towards closer integration, the statement said.

They commended the progress made by Ireland and Portugal in implementing reforms agreed in return for financial bailouts they received from the European Union (EU) and the International Monetary Fund (IMF) at the end of 2010 and in early 2011.

The two ministers also appreciated "the considerable efforts undertaken by Spain and Italy to pursue far-reaching fiscal and structural reforms."

They called upon the euro zone governments "to adopt and implement all reform steps required to deal with the financial crisis and crisis of confidence."

They also took note of the statements from European leaders last week to take whatever steps that are necessary to safeguard financial stability in the euro area, the statement said.

Geithner later held discussions with European Central Bank (ECB) President Mario Draghi, who last week hinted at the possibility of the ECB resuming its bond-buying scheme to support cash-strapped euro zone member nations such as Spain and Italy.