EU, U.S. finance ministers speaking in Davos

German Finance Minister Wolfgang Schaeuble attends a debate about a proposed set of laws to stabilise the financial sector in the lower house of parliament, the Bundestag, in Berlin January 26, 2012.

DAVOS, Switzerland (Reuters) - Following are comments by U.S. and euro zone finance ministers at the annual World Economic Forum meeting of political and business leaders on Friday.

US TREASURY SECRETARY TIMOTHY GEITHNER

ON GROWTH:

"I think if you look at the Fed's forecast and the consensus of private forecasters, people are pretty clustered in that (2-3 percent growth) area but it is still dependent how the world unfolds. We're still repairing the damage done by the financial crisis.

"On top of that we face a more challenging world. We have a lot of challenges ahead in the United States."

REGULATION

"We are putting in place healthcare reforms, we are changing the way people use energy."

ON REGULATION OF BUSINESS

"The reality does not justify that sense (that there is too much regulation). Look at the basic things you can use to measure. Profitability across the US economy is very high. If you look at investment as a measure of confidence it is strong. Exports are up. There is broad-based strength in manufacturing.

"What is holding the US economy back still is the aftershocks of the financial crisis and the fiscal pressure on governments.

"Although we recognize these reforms are tough we think the overall effect on the economy is going to be positive long term and isn't harming growth now."

ON EUROPE

"Our view is that the only way Europe is going to be successful in holding this together is for them to bring a stronger firewall and that is going to demand a bigger commitment and my feeling is the Europeans recognize that. If Europe is able and willing to do that we believe the IMF is ready to play a constructive role. I think you'll see the IMF very supportive in those efforts but not as a substitute for more effective European response."

ON IRAN

"Even over the last 6 months you're seeing a substantial intensification in (cutting) dependence on Iranian oil and my sense is also that China wants to be part of that effort because it is in China's interests not to see Iran undo the delicate balance in the Gulf."

OLLI REHN, VICE PRESIDENT, ECONOMIC AND MONETARY AFFAIRS, EUROPEAN COMMISSION

We have a better sentiment. Now is not the time for Cassandras. Now is the time to further build confidence.

ON GREECE PSI DEAL: We are very close to a deal. If not today then over the weekend and preferably in January, not February. We are very close.

ON FIREWALLS

"We have already decided on a new permanent European Stability Mechanism, which will have a capital base of 700 billion euros with a lending capacity of 500 billion euros.

"Now we have a temporary mechanism ... which leaves around 250 bln euros in this temporary EFSF. The question will be whether we can combine these two, the ESM and the EFSF. That's something that leaders of the euro zone will have to discuss and decide in the coming weeks.

"In parallel with that is the IMF, where Christine Lagarde has already requested 500 billion in additional funding, of which the euro zone has already given 150 billion euros.

"So you can calculate in which ballpark we are talking..."

GERMIN FINANCE MINISTER WOLFGANG SCHAEUBLE

ON EURO BONDS: Common bonds give the wrong incentive because you spend money you don't have on the bill of others.

ON GREECE, FIREWALLS:

"Greece is a very specific case. You can't take any consequence for any member state in the euro, it is a totally different case. We are negotiating the final negotiations on the PSI. We need a new program for Greece of debt sustainability, that is not over 120 percent of GDP in 2020. It is not easy but it will be done in the coming days.

"Greece has not only to commit itself, Greece has to deliver. Not all of the commitments have been fulfilled. That is one of the critical issues to confidence.

"We don't expect a default in Greece.

"No firewall -- you can make any figure -- it cannot work if the real problems will not be solved."

"We don't expect a default in Greece. I know many markets have priced this in for a long time. But I don't expect a default in Greece. If all partners do what is expected of them, we can avoid and we will avoid a default in Greece.

"Now we are discussing the concrete figures and I'm quite optimistic we can avoid it, but Greece has to meet its commitments.

"Greece has not only to commit itself, Greece has to deliver. Because Greece has committed itself two years ago and not all of the commitments have been delivered. We must not give them the wrong incentives."

ON SPAIN, ITALY, BROADER CRISIS:

"What we first have to do is to fight against the causes of the crisis. This is being done in various countries. Where it is happening, developments on the markets are positive. That's happening in Italy, it's happening in Spain, and we are seeing that confidence is gradually being restored."

"We must make sure that we don't set the wrong signals, the wrong incentives. We must not prevent things that must happen from happening first."

FRENCH ECONOMY MINISTER FRANCOIS BAROIN

"The unlimited liquidity provided by the ECB's three-year LTRO has reduced pressure on European banks and will help confidence to return... Now we have to think together about how we can support growth."

ON JOINT EURO ZONE BONDS

"If we mutualize debt, we don't solve the basic problem, which is the creation of a monetary zone which hasn't been created optimally."

"The path of solidarity... is not eurobonds, it involves firewalls. Down the road, when states have respected their commitments on debt, when the situation is more stable, when confidence exists in the market, then the time will be right for eurobonds. That situation does not exist at the moment but it is the ultimate aim."

LUIS DE GUINDOS JURADO, SPANISH MINISTER OF ECONOMIC AFFAIRS

ASKED WHETHER THE ECB SHOULD TAKE A WRITEDOWN ON ITS GREEK BOND HOLDINGS:

"I don't think so. We are talking about private sector involvement. That kind of haircut might impair monetary policy. So I think the ECB should not be involved in any kind of public sector involvement like the private sector involvement."

ON CRISIS GENERALLY:

"What we have to do is to put our houses in order to advance the fiscal consolidation and avoid and circumvent the problems we made in the past. Simultaneously we must try to take the measures to force the growth. We will speak more and more about growth and employment."

"For sure we will need firewalls with ample liquidity, but at the end of the day the vital element to restore confidence will be the institutional framework we put in place. We have a consensus that in the future we will avoid the problems we had in the past."

(Reporting by Paul Taylor and Paul Carrel, compiled by Patrick Graham)