Finance chiefs offer reassurance on Europe

Associated Press

DAVOS, Switzerland

Leading finance chiefs sought to reassure anxious global business leaders Friday that Europe is on track to solve its crippling debt crisis before it drags the world’s economies down. Europe’s top banker said investors, burned after trusting the region’s governments too much, now trust them too little.

The finance chiefs said the picture in Europe has changed over the past two months as the European Central Bank has loaned billions of euros to fragile banks, indebted countries have pushed through convincing reforms and EU leaders have come near to building a closer fiscal union that would make their common currency stronger.

Several also signaled Friday that Greece is close to clinching a crucial debt-reduction deal with private bondholders — a key element in Europe’s efforts to stem a two-year debt crisis that is causing ripples around the globe. The crisis is a central topic at the World Economic Forum, a gathering of government and business leaders at the Swiss ski resort of Davos.

“They’re making progress on reforms; they’re changing the institutions of Europe to put better discipline on fiscal policy,” said U.S. Treasury Secretary Timothy Geithner. “You have three new governments doing some very tough things. You have an ECB doing what central banks have to do. You see them move to try to strengthen the financial sector.”