Canadian Finance Minister Jim Flaherty said there may be more coordinated efforts among central banks to ease tensions in global financial markets stemming from the European debt crisis.
Stocks surged and the euro strengthened after the Federal Reserve and five other central banks cut the cost of emergency dollar funding for European banks as part of a globally coordinated response to the continent’s sovereign debt crisis.
“We want to see more and more of that so we don’t get unevenness in actions by central banks around the world, and we don’t get surprises around the world,” Flaherty said in a Bloomberg Television interview in New York. He said today’s action wasn’t aimed at supporting any specific financial institution.
The central banks of the U.S., the euro region, Canada, the U.K., Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements, the Federal Reserve said, and agreed to make other currencies available as needed.
European leaders need to devote more of their resources to tackling the crisis before seeking additional funding from the International Monetary Fund, Flaherty said in the interview.
“The primary responsibility for resourcing the solution to the problem in Europe rests with the Eurozone countries,” he said. “That’s been our consistent view which is shared by a number of the other countries” among the Group of 20 nations.
The European debt crisis is the main factor for a weaker outlook for the Canadian economy, according to Flaherty.
“That is in part because of the uncertainty and lack of confidence created in the real economy by the situation in Europe,” he said.
Flaherty lowered government revenue forecasts by about C$53 billion ($52 billion) between 2011 and 2016 to account for slowing growth and increased global economic risk, in a Nov. 9 update of his fiscal plan.
European finance ministers yesterday agreed to guarantee as much as 30 percent of new bond sales from troubled governments to enhance the region’s bailout fund, and to improve its ability to cap yields by buying bonds. The next 10 days will be a “critical period” to complete the crisis response, European Union Economic and Monetary Affairs Commissioner Olli Rehn said today in Brussels.
Flaherty also endorsed efforts by Canadian banks to expand abroad. “The world needs solid, stable financial institutions,” he said.