MEXICO CITY The United States should seek to manage planned spending cuts and tax hikes in such a way that the so-called fiscal cliff does not damage global growth, German Finance Minister Wolfgang Schaeuble said on Monday.
"Everything must be done...to negotiate the fiscal cliff in such a way that it does not result in any major additional damage or difficulties for the global economy," Schaeuble told a news conference in Mexico City, where he was attending a meeting of finance officials from the Group of 20 economic powers.
However, Schaeuble also said that to achieve sustained growth, over-indebted nations had no option but to reduce their debt levels, and urged other countries not to put off mid-term debt reduction goals by seeking short-term relief.
He said Germany was meeting its objectives on cutting its budget deficit, and urged other nations to follow suit.
During his joint news conference with Bundesbank President Jens Weidmann, Schaeuble said he had told other G20 nations at the talks that policymakers were trying hard to find a solution to Greece's debt problems, but had not yet achieved it.
Schaeuble said that Europe was "on the way" to achieving a banking union, but noted that a planned unified banking supervision system would not come into effect before 2014.
"If one understands the need to achieve sustainable growth in the global economy by focusing more on the real economy, then better regulation on financial markets in general is an important element to prevent excesses," Schaeuble said.
The veteran conservative politician added that the German economy was the "locomotive" that was keeping the euro zone from slipping into recession, acting as an anchor of stability.
Still, Weidmann said the German economy was likely to move "sideways" during the winter half year ahead. He noted that the outlook for 2013 could improve provided Europe's biggest economy was not hit by the full force of existing risks.
(Reporting by Dave Graham; Editing by Chizu Nomiyama and Lisa Shumaker)