OTTAWA • The deteriorating state of Europe’s debt crisis has renewed a sense of urgency among global leaders, as markets around the world continue to recoil from the threat of a financial contagion.
‘There’s a heightened sense of alarm over developments in Europe, particularly in Spain’
Group of Seven finance ministers and central bankers were to hold talks early Tuesday morning, with concerns growing that the capital-stretched financial system in Spain — the latest casualty in the region — could buckle, possibly causing a run on banks that could spread through Europe and beyond.
“I’ve been having discussions and I will have more discussions tomorrow morning and subsequently with my G7 colleagues,” Finance Minister Jim Flaherty told reporters Monday in Toronto.
“Those discussions also take place with some of the non-European members of the G20 … who are concerned around the world outside of the eurozone with the potential consequences of a crisis in the eurozone, particularly a banking crisis,” he said.
“The real concern right now is Europe of course — the weakness in some of the banks in Europe, the fact they’re undercapitalized, the fact the other European countries in the euro zone have not taken sufficient action yet to address those issues of undercapitalization of banks and building an adequate firewall.”
A G7 source told Reuters: “There’s a heightened sense of alarm over developments in Europe, particularly in Spain.”
Officials at Canada’s Finance Department and the Bank of Canada declined to comment further on Tuesday’s talks. The G7 groups Canada, the United States, Japan, Germany, Britain and Italy.
Global markets continued their descent Monday, with Toronto’s benchmark S&P/TSX composite index losing 25.43 points, or 0.22%, while the Dow Jones industrial index was down 17.11 points, 0.14%.
Financial Post
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