WASHINGTON - The worst of the crisis in European financial markets may be over, leaving the United States relatively unscathed, Treasury Undersecretary David Mulford said yesterday.

Stability is returning to Europe, we think." Mr. Mulford said. "Up until now the U.S. has been relatively unaffected by the situation."

He attributed much of the crisis in European money markets and foreign exchange markets to uncertainty over this Sunday's vote in France on the Maastricht treaty, which is to pave the way for a unified European monetary system with a single currency.

Mr. Mulford's comments came in a briefing for reporters on next week's meeting of the International Monetary Fund and the World Bank. That meeting will be preceded by a gathering this weekend of finance ministers and central bankers from the Group of Seven industrial nations, who will review efforts to escape the current slowdown in the world economy.

Mr. Mulford said G-7 officials have been in close consultation on the gyrations in the European foreign exchange and currency markets, but he stressed that U.S. officials are hoping the cuts in short-term interest rates by Germany's central bank will help stabilize the situation.

He called the rate cuts by the Bundesbank "a very important shift" that should set the stage for lower European rates, which U.S. officials want in order to spur the weak economies in Britain and elsewhere and to revive U.S. exports. The, unemployment rate in Europe is now running over 10%, cutting consumer demand the same way the stagnant job market is crimping the U.S. economy.

"Nobody wants to see turbulence in currency markets because it can have spillover effects in other financial markets if it's not addressed," said Mr. Mulford. "It has been addressed."

Still, Mr. Mulford emphasized that the current tensions in financial markets continue to pose risks and give added weight to U.S. arguments over the last year and a half that the G-7 should stimulate world growth. He said the United Stater, hopes to see additional rate cuts by Germany at some point after financial markets settle, which could give added support to the dollar and make it easier for the Federal Reserve to lower U.S. interest rates again.

The International Monetary Fund, in its annual report issued this week, called on the United States to contain the burgeoning federal budget deficit with tax increases if necessary, a strategy that President Bush is seeking to avoid during the campaign. Mr. Mulford pointedly rejected the IMF appeal, saying, "We don't accept their prescription."

Mr. Mulford also took a poke at the latest IMF economic forecast, which calls for sluggish world growth of only 1.1% this year. "The IMF has been very ineffective in determining what is going to happen in world economic developments," he said. Over the past year and a half, he noted, the monetary fund has scaled back its economic growth forecasts for the world and individual countries "something like eight times.

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