* No sustainable growth without debt reduction
* USA and Japan also need fiscal consolidation
* Sees no risk of delay with Basel III banking rules
* Schaeuble goes to G20 finance ministers talks in Mexico
BERLIN, Nov 2 (Reuters) - The United States and Japan must
share responsibility with Europe for ensuring global economic
stability, German Finance Minister Wolfgang Schaeuble said,
signalling that a G20 meeting this weekend should not focus
solely on the euro zone crisis.
Speaking in an interview before finance ministers and
central bankers from the Group of 20 nations meet in Mexico, he
said top economies must pursue structural reforms and fiscal
consolidation to win back market trust and build sustainable
growth.
Schaeuble also said in emailed answers to questions
submitted by Reuters that he saw no danger of delay in the
introduction of Basel III rules on banking capital that are due
to be phased in from January.
Schaeuble does not want the two-day G20 meeting in Mexico
City to concentrate exclusively on the euro zone crisis to the
detriment of other urgent issues such as the "fiscal cliff"
facing the United States and Japan's debt problems.
"The United States and Japan bear as great a responsibility
for (ensuring stability) as we Europeans," he said.
"The G20 economies must decisively win back confidence with
structural reforms and sustainable financial policies. This is
the most important precondition for strengthening global
economic conditions," Schaeuble said.
"Without consolidation and reforms we risk further loss of
confidence and still less growth. No sustainable growth can be
built on a mountain of debt," said the minister, known for his
advocacy of fiscal rigour even in times of recession.
In the United States, existing legislation will raise taxes
and cut spending to the tune of about $600 billion in 2013
unless lawmakers take action. However, Republicans and Democrats
have yet to agree on measures to avoid this "fiscal cliff",
which could cause the economy to contract.
The G20, which brings together major wealthy and emerging
economies, must measure its progress by the goals it set at its
Toronto summit two years ago, he added. There the developed
countries committed to halve their budget deficits by 2013 and
to stabilise their debt load by 2015.
HOPEFUL ON SPAIN, FIRM ON GREECE
Schaeuble has taken a tough line on Greece and other weaker
members of the euro zone during the region's three-year
sovereign debt crisis, insisting they swallow austerity medicine
even as their economies sink deeper into recession.
But he had warm words for Spain, saying it was on the "right
path" and that there were signs - seen for example in falling
wage costs and in the current account - that its economic
imbalances were improving.
Schaeuble reiterated that Greece, still locked in difficult
talks with its international creditors aimed at averting
bankruptcy, must implement the tough measures it has promised.
The minister dampened expectations that the euro zone's new
bailout fund, the European Stability Mechanism (ESM), might soon
be able to recapitalise banks directly, reiterating that a
planned new oversight body must first be fully functional.
"It is important that liability and control go hand-in-hand.
In other words, quality clearly comes before speed," he said.
Schaeuble said he did not fear delays in implementation of
the Basel III rules or the possibility that the United States
and Britain - which have both criticised them as too unwieldy to
work - might not adopt them.
Basel III is the world's regulatory response to the
financial crisis, forcing banks to triple the amount of basic
capital they hold in a bid to avoid future taxpayer bailouts.
"Like other international financial market reforms, Basel
III and its implementation in the most important global
financial centres are subject to an internationally-agreed
regime of checking procedures," he said.
The G20's regulatory arm, the Financial Stability Board
(FSB), will complete proposals by the time of the group's next
summit in September 2013 on regulation of non-bank financial
institutions ranging from hedge funds to insurance companies.
"We welcome the broad international consensus on a strict
regulation of money market funds which act very similarly to
banks," Schaeuble said.
(Writing by Gareth Jones, editing by David Stamp)