Canada Fin Min: EU Must Recapitalize Banks, Restructure Greek Debt

Canadian Finance Minister Jim Flaherty Monday said the European Union needs to recapitalize its banks and the euro zone requires action or “whatever” it takes to restructure Greek debt.
He warned the world is on the verge of recession if Europe doesn’t act to resolve its debt crisis, he told Irish broadcaster RTE Radio.

“It is quite clear that the Greek government is not in a position to repay the indebtedness” and the euro zone needs to write down the debt by more than 20%, or “whatever is necessary” to definitely deal with the crisis, he said.

Criticizing European governments, he said it was now time to resolve the crisis, noting there has been disagreement between France and Germany about the steps needed to resolve it. He said Germany is more anxious than France to put in place extensive governance of the euro zone.

But he said the immediate problem was recapitalization of the continent’s banks, adding there was resistance from banks about the scale of recapitalization that was required.
He added that Ireland has set a good example for other countries on the steps that need to be taken in dealing with the debt crisis.

“There is no choice than to have fiscal consolidation,” citing Greece’s “serious” debt problems.
Later Monday, Flaherty is due to speak to an Irish-Canadian business group in Dublin.
(source: Dow Jones)