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U.S., China pressure Europe on debt

Sep 24, 2011, 8:13 a.m.
European Central Bank (ECB) Governor Jean-Claude Trichet (centre L) and U.S. Treasury Secretary Timothy Geithner (centre R) smile as they gather for a group photo with other International Monetary Fund (IMF) governors, during the World Bank/IMF Annual Meetings in Washington September 24, 2011. REUTERS/Jonathan Ernst

"They have six weeks to resolve this crisis," British Finance Minister George Osborne said on Friday, referring to the need to hammer out a definitive plan by the time Group of 20 political leaders meet in Cannes, France, in November.

Geithner said on Saturday indebted countries need time to "demonstrate fiscal discipline" but urged speed in implementing changes to a 440-billion-euro European Financial Stability Facility that were agreed in July and suggested consideration should be given to even more changes.

"Further action to expand the effective capacity of these commitments is still necessary to create a firewall against further contagion," he said, without specifying what action.

G20 participants did not say how the EFSF might be altered and French Finance Minister Francois Baroin used the word "leverage" in comments to reporters on Thursday.

The United States wants Europe to leverage up the EFSF to give it more firepower. One option could be for the ECB to commit large amounts of funding to back up the EFSF.

Germany, as the strongest economy in Europe, plays a central role in any effort to curb a debt crisis.

Finance Minister Wolfgang Schaeuble said on Saturday he will meet his Greek counterpart, Evangelos Venizelos, while in Washington for the IMF meetings.

"We are permanently in contact and talk a lot," Schaeuble said, a day after German Chancellor Angela Merkel sought to dampen speculation about the chances of a Greek default by saying it was not an option for her.

"The damage would be impossible to predict," Merkel warned members of her political party in Germany.

(Additional reporting by IMF reporting team in Washington, Sakari Suoninen in Frankfurt, Writing by Glenn Somerville; Editing by Chizu Nomiyama)

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