As the likelihood of a Greek debt default grows, Canada’s finance minister is bracing for the worst.
“Ultimately the whole world would be affected if there were a bank meltdown, a credit crunch coming out of Europe,” Jim Flaherty told Sun News Network in Whitby, Ont., just east of Toronto.
Flaherty says he and Canadian officials have been pushing European leaders to do whatever it takes — even massive bank bailouts — to prevent the worst damage from a Greek declaration of bankruptcy.
A Greek debt default would leave many European banks with hundreds of billions of euros of bad debt, likely forcing many to shut down and throwing the European economy into recession.
“We’re trying to impress on (the Europeans) that these are extraordinary times,” said Flaherty. “You can’t follow normal process. You’ve got to move quickly and get ahead of the problem.”
Flaherty is heading to New York this week to talk to banking leaders about preparing for the worst.
He didn’t specify how the Conservative government would react to a European economic meltdown.
(source: Reuters, lfpress)