* Europe reforms helpful but bigger firewall needed
* Repeats won't go to Congress for more money for IMF
* Cautious optimism on progress for Italy, Spain
By Glenn Somerville
MEXICO CITY, Feb 26 U.S. Treasury
Secretary Timothy Geithner said on Sunday that Europe's actions
so far to deal with its debt crisis have averted potential
financial catastrophe but said it still must put up a sturdier
firewall against contagion.
"A durable solution requires both a sustained period of
economic reform and a substantial financial firewall to support
those reforms," he told a press conference at the conclusion of
a Group of 20 finance ministers' and central bankers' meeting.
The weekend meeting focused on Europe and many G20
participants made clear they want to see Europe put up more
money for its own defense against a worse crisis before they
chip in with more help through institutions like the
International Monetary Fund.
"There is broad agreement that the IMF cannot substitute for
the absence of a stronger European firewall and the IMF cannot
move forward without more clarity on Europe's own plans,"
The U.S. Treasury chief repeated that he was not prepared to
go to Congress now to seek more resources for the IMF because he
didn't feel they were needed at this time.
He declined to say how big a financial firewall he felt
Europe needed to put up now but noted that, in order to be
credible in markets, it had to be bigger relative to possible
claims that might be made on it.
The euro zone countries pledged on the weekend that they
would reassess the strength of the bailout fund they now have
during March. That could clear the way for other G20 countries
to contribute more funds to the IMF.
Geithner sounded an optimistic note that some of the
European countries seen as most at risk from a potential debt
crisis spreading seemed to be getting onto sounder footing.
"I'm very encouraged by the impact so far of the combined
actions of new governments in Italy and Spain doing a very good
job of laying out reforms to meet their very formidable economic
challenges," Geithner said.
He also praised "a very creative and effective" European
Central Bank, which has acted to ensure ample liquidity in
Europe. But he conceded in response to questions that progress
can take away some urgency from needed reforms.
"You always have to be worried about that but I think
Europeans recognize that part of the progress that we've seen --
new confidence in markets -- is based on the expectation that
Europeans have created themselves, that they have more to come."