WASHINGTON (CN) – Treasury Secretary Timothy Geithner urged lawmakers on Tuesday to move quickly on financial regulatory reform so the United States can lead the international community in regulating financial markets. He also said that the U.S. can no longer depend primarily on American consumption to drive its economy.
“Moving from a global economy based on U.S. demand to one based on global demand is critical to our domestic efforts to reduce unemployment and increase the wages of middle-class Americans,” Geithner said in written testimony to the Senate Foreign Relations Committee.
The United States is in the midst of tightening its financial regulatory system, but Geithner underlined the necessity for a multi-national overhaul. “Without a level playing field, then these reforms would not be effective,” he said. “We have to be able to set the international agenda on reforms.”
For the United States to set the international agenda, it must show that it can implement the necessary changes within the United States, Geithner said, and warned that a slow response by Congress in passing regulatory legislation could wear away at international momentum.
Geithner laid out his vision of the growing role of the Group of 20 – governments from the twenty leading global economies – as the forum for raising the regulatory bar globally. “We’re placing the G20 at the center of the cooperative effort,” he said.
“We must seek the engagement of partners to achieve our economic goals and objectives and serve our nation’s interests,” he said in his written testimony. “First and foremost, we are responsible for our own destiny and our job begins at home. But in today’s interdependent world, no country is isolated from global events.”
G20 nations have said they would closely monitor each other’s economies and that they would agree on regulatory overhauls by the end of 2010.
On the global scale, Europe, Japan and the United States should be the focus of regulatory change, Geithner said. Other countries, like those in Latin America, already have resilient financial regulatory systems because they had already installed precautionary measures after a 1990s crash in the Asian markets.