The US is starting to pare back its emergency support for banks and financial markets, its Treasury secretary Tim Geithner declared yesterday, taking the first step towards unwinding policies that have propped up America's battered financial system.

Almost a year to the day since the collapse of Lehman Brothers triggered a panic that tipped the US and much of the world into recession, Mr Geithner said it was time to move from crisis response to recovery.

Pointing to evidence of a healing in financial markets, which only a few months ago had been paralysed by a retreat from risk and banks' reluctance to lend to each other, Mr Geithner said the US would allow its guarantee for the $2,500bn money market mutual fund industry to expire on schedule later this month.