Geithner : Eurozone on 'a more promising path'

US Treasury Secretary Timothy Geithner praised recent measures to combat the eurozone's debt problems on Tuesday, saying the bloc was on "a more promising path" to resolving the crisis. Geithner, who will attend an annual meeting of the International Monetary Fund in Tokyo at the weekend, said he was looking forward to meeting his European colleagues there and "seeing where they are going next". He highlighted action by the European Central Bank (ECB) to reassure financial markets and also reform efforts in Spain and Italy, which have been battling high borrowing costs as a result of fears about their finances. "There are very important reforms under way in Spain and Italy, across Europe, to lay a foundation for better growth," he told a news conference in New Delhi along with his Indian counterpart, Finance Minister P. Chidambaram. These and other developments "offer a more promising path to a resolution of the crisis than we have seen to date", he added. On Monday, the eurozone unlocked the 500-billion-euro ($650 billion) European Stability Mechanism that Luxembourg Prime Minister and fund chairman Jean-Claude Juncker called "an historic milestone in shaping the future of monetary union". The permanent rescue fund, which had been initially due to enter service on July 1 but was delayed by a challenge at the German Constitutional Court, is not yet operational. Last month, the ECB revealed its Outright Monetary Transactions programme, under which the central bank will buy up the sovereign bonds of debt-wracked countries under strict conditions. By vowing to ride to the aid of countries like Spain by buying unlimited volumes of bonds to drive down borrowing costs, the announcement sent stock markets soaring as investors saw a turning point in the crisis. Chidambaram told the news conference that India had "a deep interest in seeing the eurozone crisis being resolved". "We know it will not be easy but it has affected exports and capital flows into India. At the (Tokyo) meeting we would like to hear from EU colleagues what they are doing," he added. "We will certainly encourage them to find a way out of this crisis as it is affecting all emerging markets including India."