French Economy Minister Christine Lagarde said Friday the Group of 20 was “reassured” by European plans to shore up financial stability in the eurozone. Lagarde was speaking after G20 finance ministers began two days of talks aimed at preserving a fragile global recovery in the face of the eurozone debt crisis. “I felt that our partners were somewhat reassured by the mechanisms we put in place,” she told reporters, adding that US Treasury Secretary Tim Geithner had been impressed by the pace of the plan's deployment. However, markets remain ruffled despite the European Union's move to craft a 750 billion-euro ($913 billion) rescue plan and a European Central Bank effort to buy the bonds of troubled markets. The G20 meeting sees ministers from the world's leading economies engaged in a delicate balancing act of continuing to stimulate a recovery while also reining in massive deficits in some member nations. “Fiscal consolidation is the number one priority” for the meeting, said Lagarde, although “some minority voices insist on the need for growth.” She added: “It is necessary to carry out three things simultaneously: maintaining growth, fiscal consolidation and reforms.” Officials have said the G20 meeting, in preparation for a Toronto summit on June 26-27, was unlikely to reach a conclusion on tighter banking regulation or on a proposed bank levy amid divisions over the pace and scale of implementation. A global banking tax is supported by European powers including France and the United States but some developing nations as well as Canada and Australia argue that they should not have to pay to clear up a mess they did not create. “I hope we will reach a consensus on principles. But as for the timing we will see,” said Lagarde, adding that it was “an open secret” that Canada and Australia would not be willing to be rushed into any kind of reform. Leading policymakers were unusually candid on Friday in voicing fears that the euro zone's financial and banking woes could derail the global economic recovery. The troubles of Greece and other heavily indebted European governments dominated conversations ahead of a meeting of finance ministers and central bankers of the Group of 20 of the world's top developed and emerging economies, Canadian Finance Minister Jim Flaherty said. “It is essential to ensure continued recovery that Europe fix its banks. It is essential that certain vulnerable European nations follow through with major fiscal consolidation, and get the job done,” Flaherty told reporters in Busan, South Korea. “We can't afford to be complacent,” South Korean Finance Minister Yoon Jeung-hyun told the opening session.
