HALIFAX - Canada's finance minister says the latest effort to contain a spreading government debt crisis in Europe, shore up the Euro and prevent the global economic recovery from derailing is "comprehensive and credible."
Jim Flaherty spent the weekend on the phone with many of his foreign counterparts as they discussed the latest economic crisis and the European Union's commitment of $1 trillion to help prop up financially troubled governments.
"This was important in order to maintain confidence," said Flaherty, who was in Halifax on Monday for an infrastructure announcement.
"We're all watching the impact, particularly the European ministers. ... There are a few economies that need to fiscally consolidate. I expect some more discussions with respect to financial regulation reform and trying to accelerate that agenda."
European officials were hoping that the size of the package would calm nerves and deter currency speculators from betting on a Euro collapse.
Flaherty said he wouldn't attempt to second guess the markets.
"Markets make decisions, but Canada certainly agrees ... that financial-sector reform needs to be accelerated."
Leading industrial countries agreed in 2008 to lay the foundation for change to ensure that a global economic crisis does not happen again.
Canada will play host to the G20 this summer.
"We would certainly encourage all the G20 countries to continue with the commitments that they made at the Washington summit," the minister said.
Flaherty said Canada's solid financial institutions are the best protection against fallout from the European debt crisis.
He said Ottawa's plan to return to balanced budgets is also a strong defence against market volatility.
"What we've established is a brand. ... Solid banks, solid insurance companies, fiscal responsibility at the federal government, moving back to a balanced budget by 2014 or so."
The U.S. government has shown its support for the EU package by shipping more of its currency overseas through foreign central banks to help provide liquidity in so-called swap agreements. They can, in turn, lend the money to domestic banks to provide continuing credit.
The Bank of Canada is providing a swap line of $30 billion.
Flaherty said Canada must do it's part in a global financial system because there are consequences for all.
"This is not an academic exercise. It's a very practical way of maintaining liquidity in the system," he said.
"We learned in 2008 what happens when credit markets seize up. It has an immediate effect on the economy on people's lives. Jobs get lost and businesses cannot borrow."
News of the EU's actions Monday sent markets and the Canadian dollar, which has been on a roller-coaster ride of late, higher.
