The US financial system is showing signs of recovery from the economic crisis, US Treasury Secretary Timothy Geithner said here on Thursday, but also warned against blanket state caps on traders' pay.
Geithner met French Prime Minister Francois Fillon and the pair stressed the importance of dealing with imbalances in the global economy as it begins the pull-out of the financial crisis, a statement here said.
Geithner also said in remarks to Bloomberg Television: "What we are generally seeing across the US financial system is welcome signs of stability and repair."
He said: "We are moving very quickly to try to put in place comprehensive reforms of risk-taking in the financial sector to try to make sure we put in place not just strong protection for consumers ... but also to make sure that we have a more stable more resilient financial system less prone to crisis."
This would involve restrictions on leverage by means of tightened standards for the capital held by financial companies.
Another "comprehensive" reform would affect the way people in financial companies were paid, he said in a reference over the controversy about big performance bonuses which are widely held to have encouraged imprudent risk-taking.
Financial sector pay packages had to be tightened up, he argued, but he also said: "We don't think it's appropriate for governments anywhere to try to set limits or to provide the details of compensation practices."
"We want to make sure that compensation is rewarding good performance, not bad performance and is reinforcing our basic objective to create a more stable system."
France has taken a lead in pushing for a firm line in restraining bonuses for people in the financial sector.
Meawnhile, Prime Minister Fillon assured Geithner that France was determined to balance its public finances, which are deep in deficit in line with the budgets of many leading economies in response to the global crisis, a statement from the prime minister's office said.
France had a "central target" of "an eventual return to balanced public finances."
The prime minister's office said that the two men had reviewed the international economic situation and notably the scale and effectiveness of plans to boost economies and the need to absorb global imbalances.
The statement said that the meeting had covered the importance of decisions taken at the Group of Twenty (G20) meeting of leading economies in London in April and also preparations for the G20 meeting to be held in Pittsburgh in the United States in September.
Fillon had recalled the importance of decisions in London concerning financial regulation and the need to apply quickly the decisions taken.
He also recalled France's position on strict and rapid application of the international principles laid down for the way traders in financial markets were paid.
The two men additionally reviewed the question of sanctions against Iran.
