“We will work in close agreement with the ECB, and we will, as ECB President Mario Draghi said, see results,” he said in an interview.
Economists said that there were a range of options open to the ECB, which will announce its monthly policy decision on Thursday, including further liquidity provision and full-scale quantitative easing.
The central bank has so far refrained from doing QE, but it could justify a large-scale programme of bond purchases against the threat of deflation in the eurozone.
Before his meeting with Mr Draghi, Mr Geithner met German finance minister Wolfgang Schaeuble on the German island of Sylt. They issued a joint statement stressing the need for “ongoing international co-operation and co-ordination” to stabilise the international economy.
The meeting followed strong comments from Mr Draghi in London on Thursday, who appeared to try and bolster market confidence before policymakers disappear for their summer break, vowing to do “whatever it takes” to save the euro, within the ECB’s mandate. “Believe me, it will be enough”, he added for emphasis.
Policymakers in Germany, France and Italy put their weight behind comments yesterday.
Investor optimism was also clearly signalled by falling borrowing costs in Spain, which have breached unsustainable levels amid speculation that a full-blown sovereign bailout will be required.
The yield on benchmark 10-year bonds fell to 6.64pc yesterday, after hitting fresh euro-era highs last week of above 7.5pc. The equivalent Italian yield also fell to 6.02pc, and the Government was able to sell €5.47bn of bonds at a lower cost compared with previous auctions.
Spanish markets rose and borrowing costs came down despite official confirmation that the country sank deeper into recession in the second quarter. The economy shrank for a third consecutive quarter by 0.4pc between April and June.
Spanish households were put under further pressure by rising prices, with the annual inflation rate jumping to 2.2pc in July from 1.8pc in June. Economists had forecast a smaller rise to 1.9pc.
Standard & Poor’s has forecast the Spanish economy will shrink by 1.7pc this year, followed by 0.6pc in 2013, and warned it would take “several more years” before the deleveraging process is complete in the eurozone.
Eurozone business and consumer confidence fell in July, with Germany suffering the biggest drop. The region’s economic sentiment index fell for a fourth month to a near three-year low of 87.9, from 89.9 in June.
Meanwhile parties comprising the Greek coalition government resumed talks to agree further spending cuts.
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