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 The European Union agreed a blueprint last month to close failing
banks. But most economists say the plan does not go far enough to
shield governments from the huge costs of winding down dud lenders.
"We've made no secret over the years that we think having backstops
in place is very important and we would like to see more action
taken," Lew said after meeting with French Finance Minister Pierre
Moscovici.
Lew welcomed the progress Europe has made over the last 18 months
building its banking union of jointly managed supervision and
resolution of lenders, but there was more to gain by being bolder.
"It will continue to be our view that the more capital that there is
in European banks, and the stronger the backstops are, the better it
is for the European economy, the U.S. economy and the world
economy," he told a joint news conference with Moscovici.
Under the plans agreed last month, banks will gradually pay into a
single resolution fund over the next 10 years, eventually providing
it with roughly 55 billion euros ($75 billion).
Until then, individual governments will be left to pay the bill for
any bank failures.
Along with joint banking supervision and a deposit guarantee scheme,
the resolution fund is one of the key pillars of a banking union
designed to keep bank failures from pushing governments to the brink
of bankruptcy.
While some doubt the measures will be sufficient in the event of a
big bank failure, Moscovici defended Europe's banking union plans.
"We now have a solid and safe banking union that can ensure the
stability of our financial system and put an end to the
fragmentation of our financial system, allowing all of our citizens
and companies to benefit fairly from having a shared currency," he
said.
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Turning to economic growth, Lew said countries generally needed to
take action to boost demand. But he steered clear of specifically
citing Germany, after Washington angered Berlin in October by
accusing it of doing too little to support the rest of the European
economy.
"It's obvious that some countries have more capacity to stimulate
growth in demand than others do," Lew said.
Washington had said Germany was fueling deflationary pressures in
the euro zone and the broader world economy through its
export-driven economic model and weak domestic demand.
The U.S. bilateral trade deficit with Germany has more than doubled
in the last three years, accounting for a growing share of the U.S.
overall trade gap.
For his part, Moscovici said France and the United States shared the
view that countries need to strike a balance between restoring their
public finances to health and supporting growth.
(Reporting by Jason Lange and Leigh
Thomas; editing by Mark John)
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