Obama urges euro zone leaders to take charge of debt crisis

LEADERS IN the euro zone need to show markets they are taking responsibility for its debt crisis and work out how to tally monetary…

LEADERS IN the euro zone need to show markets they are taking responsibility for its debt crisis and work out how to tally monetary union with budget policy, Spanish press reported US president Barack Obama as saying.

Greece is the immediate concern, but an even bigger problem is what may happen should markets take another run at the larger economies of Spain and Italy, the EFE news agency reported Mr Obama as telling Spanish-speaking journalists in Washington.

“It is difficult to co-ordinate and agree a common path when you have so many countries with different policies and economic situations,” Mr Obama said, according to the report on the El Mundo newspaper website.

“In the end, the big countries in Europe, the leaders in Europe must meet and take a decision on how to co-ordinate monetary integration with more effective co-ordinated fiscal policy,” the Spanish-language report quoted Mr Obama as saying.

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US treasury secretary Timothy Geithner is due to make an unprecedented trip to Poland this week to meet euro zone finance ministers as fears grow that Greece will soon default on its debt.

He is likely to urge them to speed up ratification of changes to their bailout fund and consider boosting its size, said EU sources.

Officials said Washington was worried that the euro zone was not acting fast enough to enhance the fund, known as the EFSF, and that the stability of the global financial system was at stake.

Weakness in the global economy will continue so long as the euro zone crisis is not resolved, Mr Obama said.

A long-term solution is possible if markets believe euro zone countries with budget surpluses are willing to back their partners in the monetary union, he said.

The United States is deeply involved in consultations with the euro zone over how to resolve the crisis, Mr Obama said. – (Reuters)