US Treasury Secretary Timothy Geithner in a speech today encouraged European governments to support the International Monetary Fund’s (IMF) efforts to double its cash on hand and build an even higher firewall to prevent financial contagion from spreading in the Eurozone. The IMF is seeking about $400 billion in new cash, of which Eurozone governments have committed to raising $200 million.
Geithner also reiterated that the US will not provide any cash to the IMF’s efforts. In Geithner’s view the unlimited debt swap line the US Federal Reserve has made available to the Eurozone’s banks is another brick in the firewall.
At this week’s meeting of Eurozone leaders, Geithner encouraged discussion of moderating current austerity measures to prevent a reduced growth and higher debt. Geithner also supports the recent long-term financing operations (LTRO) carried out by the European Central Bank, and said he saw a continuing need for such support.