Geithner wants G8 to do more on stimulus, reform

The US will press G8 finance ministers to stay the course on economic stimulus and financial reforms despite signs the global recession is easing, Treasury Secretary Timothy Geithner said Tuesday.

"I think it is fair to say the force of the global storm is receding a bit," Geithner told reporters before his trip to the Group of Eight finance ministers meeting in Lecce, Italy, on June 12-13.

He said fears about a financial sector meltdown and global deflation are receding, while confidence appears to be on the rise.

"These are encouraging signs," he said.

"I think fundamentally those signs of improvement ... are the result of policy actions we have put in place here in the US and around the world."

He said the efforts of the G8, which include the leading industrialized economies plus Russia, and the G20, which includes big emerging economies have had "a powerful impact on confidence."

"Of course we want to see those actions sustained," he added.

"The dominant focus of policy still is to see we have a strong foundation for recovery in place with enough traction ... that is still the dominant preoccupation of policy everywhere."

Geithner said the administration of President Barack Obama would soon unveil details of a broad financial market regulatory overhaul, aimed at averting a new financial shock.

He said other countries would be urged to take similar actions.

"We're doing this for the United States and we will do what is necessary to help restore confidence," he said.

"As we do that we will try to make sure the world moves with us."

Geithner decline to comment specifically on reports of disputes among leading nations on reforms and stimulus measures.

He said other countries "are going to make different judgments ... in part because they have different systems."

One report said Washington wants European banks put through more rigorous public stress tests to ensure the institutions' survival if economic woes worsen.

On Monday, the International Monetary Fund warned an economic recovery could be slow if banks do not speed up a "cleansing" of bad investments and lay bare their toxic assets, in order to restore confidence and get credit flowing.

IMF director Dominique Strauss-Kahn said in a speech in Montreal the banking sector represented "probably the biggest downside risk for a 2010 recovery."