Geithner in Europe for debt talks

@CNNMoney September 16, 2011: 9:02 AM ET
U.S. Treasury Secretary Timothy Geithner is meeting with eurozone finance ministers in Poland to discuss the debt crisis.

U.S. Treasury Secretary Timothy Geithner is meeting with eurozone finance ministers in Poland to discuss the debt crisis.

WROCLAW, Poland (CNN) -- Treasury Secretary Timothy Geithner is attending a meeting of finance ministers in Poland on Friday amid growing concern over the worsening debt crisis in the eurozone.

Finance ministers for the European Union member states, central bank presidents and representatives of other major bodies are expected to focus on how to handle Greece's debt and boosting financial stability in the eurozone.

A statement from the Treasury Department said Geithner would also discuss recovery efforts and cooperation on financial regulatory reform.

The two-day meeting of Europe's Economic and Financial Affairs (ECOFIN) Council in Wroclaw -- hosted by Polish Finance Minister Jacek Rostowski and the president of the National Bank of Poland -- comes ahead of G-20 and International Monetary Fund meetings later this month.

Europe's debt crisis: 5 things you need to know

Markets in Europe have been in turmoil in recent weeks as concern mounts that Greece might default on its huge debt, which would send shock waves through the 17-nation eurozone and beyond.

European banks have come under increasing pressure as the markets weigh their exposure to sovereign debt held by Greece and other struggling eurozone nations.

Credit rating agency Moody's downgraded two French banks this week.

IMF chief Christine Lagarde warned in a speech Thursday that the global economy faced "great economic anxiety" and a shrinking range of possible solutions.

"We have entered into a dangerous phase of the crisis," she said. "Collective, bold, decisive, courageous action is needed."

But despite the gloomy picture, Lagarde said she believed there was still a "path to recovery" ahead, although it would be harder to achieve than after the collapse of the Lehman Brothers bank three years ago that precipitated a global financial meltdown.

"It will require strong political will across the world, not just in one country but in many countries, and it will require decisive action on the part of some central banks," she said.

Her speech came hours after the Federal Reserve and four other powerful central banks announced they were throwing a lifeline to Europe's struggling banks by providing much-needed access to U.S. dollars.

The European Central Bank, along with the Fed, the Bank of England, the Bank of Japan and the Swiss National Bank, said three U.S. dollar auctions would be held from October to the end of the year to help out European banks that need the currency to fund loans and repay debt.

IMF chief Lagarde: World debt stifles economies

European banks have seen U.S. dollars flow out as U.S. financial institutions and money market accounts scale back exposure to European banks amid fears over those institutions' exposure to debt held by Greece and other European nations.

Separately, Swiss bank UBS (UBS) announced Thursday it had suffered an estimated $2 billion loss from unauthorized trading -- potentially one of the biggest such losses ever.

No clients would be affected but the "unauthorized trading by a trader in its investment bank" could cause UBS to post a loss in the third quarter of this year, it said.

-- CNN's Jim Boulden and Kendra Petersen contributed to this report. To top of page

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