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UPDATE 1-U.S. says Europe bank failure fund inadequate
January 16, 2014 / 3:40 PM / 4 years ago

UPDATE 1-U.S. says Europe bank failure fund inadequate

WASHINGTON, Jan 16 (Reuters) - The United States is concerned that Europe is not moving decisively to heal its banks and that China will only slowly move toward a more market-based economy, U.S. Treasury Secretary Jack Lew said on Thursday.

Washington has been raising pressure on Europe to boost the region’s ailing economies by revitalizing banks hit by a debt crisis.

Lew said a deal struck in Europe last month to create a fund for dealing with future bank failures was important, but inadequate. The fund would use bank levies to amass 55 billion euros ($75 billion) over the next decade, a tiny sum relative to size of bank balance sheets.

“We don’t think it’s big enough. We don’t think it’s fast enough,” Lew said at an event held by the Council on Foreign Relations.

Last week, Lew traveled to Paris, Berlin and Lisbon in part out of concern over the region’s troubled banking sector, which has been cutting back lending to businesses.

Lew also said he does not have confidence over the time frame of China’s plans to reduce the state’s role in making economic decisions.

“I am pretty confident that they are intent on the path of economic reform,” he said. “At the same time, I am not confident about the time frame or which targets of opportunity will be sequenced early in the queue.”

He said the United States was waiting for the Chinese to follow through on their plans to allow foreign companies to play a bigger role their economy. Allowing U.S. financial firms to compete in a planned Shanghai free trade zone, he said, “would be a meaningful signal.”

“Intentions are critical and they are important but it’s results in the end that matter,” Lew said.

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