President Obama expressed concern over the euro zone crisis in an interview with Spanish journalists published on Tuesday, Reuters reports.
The president said that euro zone leaders need to demonstrate to markets that they are taking responsibility for the debt crisis. They also need to figure out how to harmonize monetary union and budget policy, he added, noting that while Greece is presenting an urgent problem, there could be much bigger issues if the markets tank in Spain and Italy.
Further indicating the growing concern in Washington over euro-zone developments, Treasury Secretary Timothy Geithner will take an unprecedented step in attending a meeting of EU finance ministers in Poland this Friday, according to Reuters. Geithner met with his main EU counterparts at a G7 meeting in Marseille less than a week ago.
German Chancellor Angela Merkel sought to reassure investors that the euro zone was working to solve its problems. In a radio interview on Tuesday, Merkel said Europe was doing everything it could to prevent Greece from defaulting. She asked politicians in her coalition to speak carefully to avoid further roiling markets.
The German chancellor warned that if the euro zone dissolved, “we would see domino effects very quickly.” She suggested that the path forward for the bloc would be to invoke sharper punishment for euro zone states that violate its budget discipline rules, Reuters reports.
European markets posted gains in early trading on Tuesday on hopes that China would buy Italian debt. After reports to the contrary, stocks resumed their Monday slide, shaped by fears of a Greek default and the looming possibility that three of France's largest banks could have their credit ratings cut.