By Heather Scott

IQALUIT, Canada (MNI) - U.S. Treasury Secretary Tim Geithner dispelled concerns about discord among the Group of Seven governments on the direction of financial sector reform, stressing Saturday that though the United States moved first, all members share "a deep commitment" to press forward and stick to the timetable for agreement by year end.

He also said the EU delegation assured the G7 meeting that Greece's debt challenges will be managed with great care.

Speaking following the meeting of G7 finance ministers and central bank governors held in Canada's Arctic, Geithner said reforms including increased supervision of financial institutions to limit risk to broader markets will be done with great care to avoid putting the brakes on the economic recovery.

Canada Finance Minister Jim Flaherty and UK Chancellor of the Exchequer Alistair Darling each stressed the G7 commitment to keep economic stimulus measures in place until a recovery is secure, as well as to plan for a careful return to fiscal discipline.

The financial reform issue has been portrayed in press reports as one source of contention among G7 governments after the Obama administration moved ahead of others in announcing plans to impose tough restrictions on financial institutions including a fee on banks to repay government aid, and limits on growth and risk-taking by large institutions.

But Geithner told reporters that has been overplayed.

"I think we all share a deep commitment to try to move forward and reach agreement on a strong, comprehensive set of financial reforms on the timetable we all committed to last September," he said, referring to the agreement at the Group of 20 summit in Pittsburgh.

"That means agreement for example on a new set of capital requirements for large global institutions by the end of this year," the U.S. Treasury secretary said.

While it is in the interests of all economies to have a "level playing field" across global markets, Geithner said there are differences among economies that mean "these common standards we put in place are going to have to be complemented by slightly different approaches at the national level."

But he said, "what you saw today was not a divergence in approach but a strong commitment together to try to make sure we're putting in place the kind of strong reforms that would prevent these kind of crises from happening again."

In addition, Geithner said, "We're going to design this framework with great care, and we're going to make sure that as we put it in place we're going to do so in ways that don't undermine prospects for recovery."

France's Finance Minister Christine Lagarde echoed Geithner's comments, saying "there was very, very strong consensus to keep the momentum, to work comprehensively, as cooperatively as we can, to be very mindful of the level playing field imperative that we have, and to appreciate that while we all want to have as consistent a basis as we can, there will be some specificities relating to each and every country.

"But," she said, "we're all focused and concerned about the fact that whatever we put in place should not prevent recovery from being sustained and continuous."

This G7 meeting was unusual for its remote location -- in the capital of Canada's newest and most northernmost territory of Nunavut -- and also in its informality. Host Flaherty stressed the lack of formal communique which allowed officials to spend more time talking and less crafting a carefully worded statement.

But the officials made clear that there was more, not less, substance in the talks. In a nod to the rising concerns in some sectors over growing debt levels, the officials stressed that stimulus measures will remain in place until a solid recovery has been established.

Geithner said, "I think we all share a commitment that when a strong sustainable recovery is in place led by the private sector, and we're able to turn to starting to unwind and walk back the exceptional measures we took in this crisis, that we do that with great care not to undermine recovery."

And the UK's Darling said, "The important thing is we are all absolutely committed to maintaining the support for our economies until we make sure that we have recovery established" and then to "chart a way to make sure we have sound, long-term growth in future."

Darling noted that the global economy has "come through an extremely turbulent period," but now "I think we can be confident, although we remain cautious, that we are on the right path provided we see that through."

Growing fears of default in smaller EU countries, especially Greece, provided a grim backdrop to the meetings which began Friday, and while the EU officials present did not discuss the matter, Geithner made a brief reference to the issue:

"The European authorities gave a very comprehensive review of the program now in place to address the challenges faced by the Greek economy. They made it clear to us that they will manage this with great care," he said.

Separately, a senior U.S. Treasury official told a small group of reporters that the U.S. is confident in the EU ability to manage the situation.

The official said despite the remarkable turnaround from the dramatic global financial crisis, there are still aftershocks affecting all the world's economies. But the official said he is encouraged by the early shape of the global recovery, including strong growth in China that is more fueled by domestic demand.

This G7 meeting was like others in that the ministers said they discussed currencies, but without a communique there was no specific language to digest and analyze for comparison with previous ones, particularly with respect to the focus on China.

Comments by Geithner and Flaherty in recent days, repeating the need for China to move to a more flexible exchange rate regime, though no different from previous statements still became the focus of market reaction.

Flaherty said the officials "discussed currencies as usual. We maintained direction we established in Istanbul and will continue to follow that."

That communique issued Oct. 3, 2009, included the following: "We continue to monitor exchange markets closely, and cooperate as appropriate. We welcome China's continued commitment to move to a more flexible exchange rate, which should lead to continued appreciation of the Renminbi in effective terms and help promote more balanced growth in China and in the world economy."

The U.S. Treasury official said there was no specific discussion of China's exchange rate at the Arctic meeting.

** Market News International Washington Bureau: 202-371-2121 **