OTTAWA - Canada's finance minister says the world has learned it takes quick government action to defuse a sovereign debt crisis like the one facing the European Union.
Jim Flaherty says Greece's debt crisis has the potential to de-stabilize the international financial system, much as the collapse of Wall Street investment bank Lehman Brothers did in 2008, triggering a global recession.
But Sunday's commitment by the European Union to a $1 trillion fund that will backstop Greece and other countries shows the world has learned a lesson.
Flaherty says European governments realized that decisive action was needed and that it had to be big.
Analysts point to a loss in confidence and a subsequent freeze in credit markets after the U.S. government decided to let Lehman fail in the fall of 2008 as major contributors to the 2008-09 recession.
Flaherty adds the European crisis is not over and will be a key topic of discussion at the upcoming G20 summit in Toronto next month.
The minister also said that the direct impact on Canada's economy is limited, especially if Europe and the International Monetary Fund are successful in heading off a major shock.
