Canada not affected by Europe’s debt crisis- Carney

Canada, 10th June: Mark Carney, governor of Bank of Canada has maintained that Canada is going to remain unaffected by the current debt crisis of Europe.

The impact will continue to be limited if Europe acts to cut risks, added Carney.

He also expressed his confidence in the actions of European Central Bank in withholding the crisis.

Till now, the effects, both the potential and the actual, appear to be minimum; however, they are, to a large extent, dependent upon the ability of the governments and the central banks to take actions. The decisive action has been imminent in the recent crisis.

Although the spillovers had been evident in Europe, there has been continued significant improvement in the financial system of the world over the past couple of years, the governor added.

Speaking before a gathering of political and business leaders, Carney said that the governments of G20 nations are seen working on desired improvements including reforms that will help in extending regulatory strength to drive the sector back on the right track.

So, the risks for not just Canadian economy but also for global economy are dependent on deficit reduction coupled with economic development. It may be worth mentioning that Canada has become the first G7 nation to introduce a hike in the interest rates in the last week when the rate was increased by a quarter to 0.50 percent.

If the central banks want to limit the risk of higher interest rates in the near future, they must act on keeping inflation under control, warned Carney.

The fact that Canada has not been affected by economic crisis was reinforced by the recent report released by the OECD (Organization for Economic Co-operation and Development), stated Jim Flaherty, Federal Finance Minister.

Among the G7 nations, Canada was the last nation to enter the recession and the first to come out of it. and, if it wants to maintain its economic development, then it needs to work collaboratively with the other member nations of G20, Flaherty reiterated.

The choice is clear, either the European nations should plan and work towards reducing their deficits; or they will be compelled by the markets to do so haphazardly, the minister remarked.