Geithner: Currency Problems Risk Global Growth

WASHINGTON (CNNMoney.com) -- Treasury Secretary Timothy Geithner -- in remarks that appeared aimed toward China -- took a sharper tone on the issue of currency Wednesday, saying global economic growth could be at risk unless developing nations are more flexible about undervalued currencies.

Without mentioning China by name, Geithner said tight controls on currency risk "either causing inflation and asset bubbles in emerging economies, or else depressing consumption growth and intensifying short-term distortions in favor of exports," in a speech at the Brookings Institution in Washington.

Geithner said that a main U.S. goal going into International Monetary Fund meetings in coming days is to "convince" those nations controlling their currencies to be more flexible.

"It is not good for the world for the burden of solving this problem to rest on the shoulders of the United States," the Treasury secretary said. "It's better for it to come from a multilateral context."

However, Geithner wouldn't say whether he would be willing to talk to other countries about coordinated action forcing nations that are being less flexible with their currency to move forward.

Geithner said the most important policy challenge all global nations face, including the U.S., is figuring out how to improve economic growth.

"Most of us still have the capacity to take additional actions that would improve both short-run and long-run growth prospects," Geithner said.

He suggested that the U.S. policymakers also have more they could do but warned a big U.S. challenge is a lack of political will, implying that the problem lies with Congress.

"The most important thing we can do now is to make sure this recovery is self-sustaining," he said. "Then we'll be in a much better position to address fiscal challenge," like growing budget deficits.

Geithner said that the U.S. economy is "absolutely healing," in spite of sluggish economic reports this summer. He acknowledged continued weakness in real estate and construction but pointed to strength in the exports and the technology sector.

"It's healing more quickly than any of us thought," Geithner said