Bernanke: 'Critical fiscal and financial challenges remain for the euro zone'

Testifying today before the US House Committee on Financial Services, Federal Reserve Chairman Ben Bernanke said that 'critical fiscal and financial challenges remain for the euro zone.'

“Most recently, European policymakers agreed on a new package of measures for Greece, which combines additional official-sector loans with a sizable reduction of Greek debt held by the private sector. However, critical fiscal and financial challenges remain for the euro zone, the resolution of which will require concerted action on the part of European authorities,” he remarked.

The official also stated they are following the situation with apprehension. “Further steps will also be required to boost growth and competitiveness in a number of countries. We are in frequent contact with our counterparts in Europe and will continue to follow the situation closely.”

He also recognized Europe’s efforts to neutralize the economic crisis hovering over the continent. “A number of constructive policy actions have been taken of late in Europe, including the European Central Bank's program to extend three-year collateralized loans to European financial institutions,” the official stressed.

Bernanke also commented on the steps the US government is taking to free itself from Europe recession contamination.

“To help prevent strains in Europe from spilling over to the US economy, the Federal Reserve in November agreed to extend and to modify the terms of its swap lines with other major central banks, and it continues to monitor the European exposures of US financial institutions,” he added.