G7 to tackle European debt crisis

French Finance Minister Christine Lagarde (L), US Treasury Secretary Tim Geithner (C) and Federal Reserve Chairman Ben Bernanke wait for the start of a G7 meeting in April.

NEW YORK (CNNMoney) -- The sovereign debt crisis in Europe will be the main topic of discussion when finance officials from the world's largest economies meet later this week in France, a senior Treasury official said Wednesday.

U.S. Treasury Secretary Tim Geithner will attend the two-day meeting of finance ministers and central bankers from the Group of Seven major economic powers in Marseille starting Friday. The meeting comes ahead of a gathering of the Group of 20 political leaders in November.

The talks will focus on Europe's ongoing battle to calm shaky sovereign debt markets as the global economic recovery has slowed, the official said in a briefing with reporters.

"Europe's most important contribution will be to take decisive action to build a stronger firewall to prevent the crisis from spreading," the official said.

The European Union has been struggling to resolve a long-running debt crisis that pushed Greece to the brink of default earlier this year, and has been threatening large economies such as Italy and Spain.

The Treasury Department will continue to work with officials in Europe "as they elaborate their own plans for addressing financial volatility and sovereign stresses," the official said. "It's important to the health of our own economy."

European political leaders announced a set of proposals in July to help contain the crisis and stabilize the euro, which 17 members of the 27-member European Union use as their currency.

But investors in the sovereign debt market remain unconvinced that policymakers will follow through on the commitments announced in July. Meanwhile, shares of major European banks have recently plunged as investors worry about their exposure to bonds issued by troubled eurozone governments.

"It's extremely important to ensure that countries that are vulnerable to the decline in market confidence have assurances that they will continue to have access to funding at sustainable costs," the Treasury official said.

It is also critical, the official added, "that the banking system continues to have access to the liquidity it requires."

Is the euro doomed?

The official said a proposed expansion of the European Financial Stability Fund "represents a major step forward in crisis response."

As part of the July agreement, European leaders announced plans to authorize the stability fund to buy government bonds directly from private sector investors in the secondary market. The measure, which needs to be ratified by all 17 eurozone nations, will be voted on in the next few months.

Aside from the crisis in Europe, the G7 ministers will cover ways to address the recent slowdown in economic activity around the world, according to the Treasury official.

Other topics on the agenda include: Japan's recovery from the March earthquake and tsunami, the need for a more flexible exchange rate in China and ways to support economies in the Middle East and North Africa following the so-called Arab Spring political uprisings.