The crisis in the euro zone has sent shocks to the United States through trade and financial channels, given the important cross-Atlantic economic linkage, U.S. Federal Reserve Chairman Ben Bernanke said Wednesday.
"The European Union accounts for roughly one-fifth of U.S. exports of goods and services. The U.S. exports to Europe over the past two years have underperformed our exports to the rest of the world," Bernanke said in a testimony before the House Committee on Oversight and Government Reform.
"In addition, weaker demand from Europe has slowed growth in other economies, which has also lowered foreign demand for our products," he added.
Bernanke noted that besides trade, financial strains in Europe have also shown through to U.S. financial markets. Although the U.S. financial firms and monetary market funds have had time to adjust their exposures and hedge their risks to some degree as the European situation has evolved, the risks of contagion remain a concern, he said.
Bernanke highlighted the actions taken by European policymakers, saying that they helped lessen financial stresses in Europe in the past few months and contributed to an improved tone of financial markets around the world, including the United States.
"However, Europe's financial and economic situation remains difficult, and it is critical that the European leaders follow through on their policy commitments to ensure a lasting stabilization," Bernanke stressed.
He said the Federal Reserve would continue to monitor the situation closely and be ready to help stabilize U.S. markets if necessary.
U.S. Treasury Secretary Timothy Geithner, who also testified before the committee, reiterated that it is in the interest of the United States that the International Monetary Fund (IMF) is able to continue to play a constructive role in Europe.
However, IMF resources cannot substitute for a strong European response, he added.
VietNamNet/Xinhuanet
