G20 finance chiefs to discuss Europe's 'comprehensive plan'

Treasury Secretary Tim Geithner will attend a meeting of finance ministers from the Group of 20 economies later this week in Paris.

NEW YORK (CNNMoney) -- Finance ministers from the world's leading economies will focus on ways to strengthen the faltering global recovery at a meeting later this week, according to a senior U.S. Treasury official.

Lael Brainard, under secretary for foreign affairs at Treasury, said the debt crisis in Europe "represents the most serious risk to the global recovery today."

"The consequences of delay are growing and calls for solutions are growing," Brainard said in a briefing with reporters ahead of a G20 ministerial meeting in Paris on Friday.

In addition, she said Treasury Secretary Tim Geithner and other G20 officials will continue to press China to move toward a more flexible exchange rate for its currency, the yuan.

The United States is eager to hear details about the "comprehensive plan" European leaders have been working on to address long-standing government debt and banking problems, according to Brainard.

European Commission president Jose Manuel Barroso announced a five-point plan Wednesday to address Europe's problems, saying leaders should agree on the plan at a meeting of the European Council on Oct. 23.

Brainard said G20 ministers, including Treasury Secretary Tim Geithner, expect to have "robust discussion" about the details of the plan.

"The world wants to come together around Europe's plan," she said. "The first step will be to have the comprehensive plan on the table and mobilize the resources that are available. And then we'll all be in a better position to ensure that we have the resources we need in international system."

Europe: "We need to get ahead of the curve"

Brainard supported proposals to "leverage" the EU's bailout fund, known as the European Financial Stability Facility. The fund, she said, could be used to provide a "backstop" for the European banking system, which is in need of more capital.

"We have a huge stake in Europe's strength and stability," said Brainard. "The U.S. very much wants to see Europe move forward on a comprehensive plan."

Brainard noted that the recapitalization of U.S. banks during the 2008 financial crisis was "extraordinarily important in restoring market confidence."

"At the time, it was seen as a risky endeavor," she said. "But it turned out to be just the medicine that the market needed."

Market's biggest risk? Duh. Europe

Brainard said the Obama administration supports efforts to help Greece get out of debt and will continue to work with the European Union and the International Monetary Fund to help contain the debt crisis in Greece from spreading to other troubled euro area nations such as Italy.

She noted that Obama spoke earlier this week with British Prime Minister David Cameron and French President Nicolas Sarkozy.

The IMF, which has been working closely with EU officials to help Greece, Ireland and Portugal, has sufficient capacity to continue supporting bailed-out euro area nations, she said.

Aside from Europe, Brainard said the G20 will discuss ways emerging economic powers can help bolster the global economic recovery.

In particular, she said China should take steps to boost domestic consumption and allow its currency to appreciate.

The Senate passed legislation late Tuesday that targets China's undervalued currency, which many lawmakers say hurts U.S. manufacturers. The bill elicited a sharp response from the Chinese foreign ministry, which warned of a "trade war."

Brainard said the White House "shares the goal of the legislation to have a more level playing field." But the administration objects to certain aspects of the bill, which she said were under discussion with members of Congress.

China isn't the only currency 'manipulator'

China has made progress, Brainard acknowledged, adding that the yuan has appreciated 10% against the U.S. dollar since June 2010. But "we want to see faster appreciation of the Chinese currency in line with market fundamentals," she said.

However, Brainard added that the China, which is struggling with rapid inflation, does recognize the need to allow its currency to appreciate.