Obama: Europe Should Stress Financial Integration

By: CNN (Posted by Kion Hudson)
By: CNN (Posted by Kion Hudson)

(CNN)-- U.S. President Barack Obama, speaking at the conclusion of the G-20 Summit, said Tuesday he encouraged eurozone leaders to develop a framework for "European integration" rather than breaking apart.

"If people have a sense of where they are going, that can provide confidence and break the fever," Obama said.

European leaders discussed their desire for a "fiscal union" that will support their banks, U.S. Treasury Secretary Timothy Geithner said Tuesday.

Geithner said European leaders, meeting again late next week, want to design a long-term framework for stability and take immediate steps to back financial systems.

"What this means is a framework of reforms so they can stand behind their banks, provide capital to the banks that need it, make sure they're protecting the safety of their depositors," Geithner said.

Leaders there will work to ensure Italy and Spain can borrow at sustainable interest rates, said Geithner, indicating the United States was "encouraged" by European leaders and the meeting's focus on economic growth.

The European Union earlier this month unveiled a plan to create a coordinated banking union rather than leaving troubled nations to deal with their own banking crisis.

The proposal would include a single deposit guarantee organization covering all banks in the union, something similar to the FDIC that covers U.S. bank deposits

The summit largely focused on boosting a sluggish global recovery threatened by a possible collapse of the euro currency union.

European leaders are moving with a "heightened sense of urgency" to address the continent's financial problems, according to Obama. "They understand the stakes and pledge to take the action needed to address this crisis."

Obama met earlier with Chinese President Hu Jintao.

Host President Felipe Calderon of Mexico, speaking at the end of the summit, said leaders agreed to extend a commitment to not introduce protectionist measures until 2014.

He also told reporters that Spain had not formally asked for a bailout.

The International Monetary Fund said a number of member countries made emergency fund pledges, helping "efforts to create a $456 billion global firewall that puts the IMF in a much better position to help its 188 member countries restore sounder economic and financial conditions worldwide. "

"These resources are being made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members," said managing director Christine Lagarde.

The summit largely focused on one of the primary causes of the global economy's lethargic recovery -- the threat of a European currency collapse that would roil the already fragile economies of most of the 17 countries that use the euro.

Obama played a role in ensuring other G-20 nations heard about European strategies, according to a senior administration official.

"The framework they (Europeans) are building, as they described it to us, amounts to a more forceful response than they've contemplated to date," the official said.

While most of the formal summit sessions -- including two rounds of talks and a working lunch Tuesday -- were in private, Obama and other leaders offered comments to reporters during brief photo sessions at their bilateral meetings.

A main topic of the summit was Sunday's elections in debt-ridden Greece, where the center-right New Democracy party received the most votes and was asked to try to form a coalition government.

"They all want to work in partnership with Greece to make sure that Greece is reforming within the EU," Geithner said of European leaders.

The members of the G-20 are the United States, the European Union, Germany, Great Britain, France, Italy, Japan, Russia, China, Canada, Argentina, South Korea, South Africa, Mexico, Brazil, India, Indonesia, Saudi Arabia, Turkey and Australia.

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