U.S. Treasury Secretary Henry Paulson on Tuesday expressed his confidence that the United States will safely get through the credit crisis roiling the country's financial markets.
"We've been seeing stresses and strains in a number of capital markets, but this is against the backdrop of a very strong global economy, a very healthy U.S. economy," noted Paulson in an interview on CNBC.
The backdrop suggested that the U.S. economy should be able to weather the financial storm. "We are going to work through this problem just fine," he said.
He urged patience as investors reassess their appetite for risk, saying there isn't a quick solution to the matter.
"This will play out over time and liquidity will return to normal when the market has a better understanding, when investors have a better understanding, of the risk return trade-off," the secretary said.
Paulson's remarks came after U.S. stock markets experienced strong volatility in recent weeks due to concerns about a credit crunch stemming from the U.S. high-risk subprime mortgage sector, which offers loans to people with weak credit histories and lower incomes.
As home foreclosures are rising, investors have fled away from mortgage-backed securities and lenders have tightened their lending practices.
Also on Tuesday, the Federal Reserve pumped another 3.75 billion dollars into the financial system, trying to unblock the credit crunch. Since Aug. 9, the U.S. central bank has injected a total of 101.25 billion dollars into the money markets.
On Friday, the Fed cut its discount rate to commercial banks to5.75 percent from 6.25 percent, a significant action to boost liquidity in the banking system.