Canada’s Economy Vulnerable To European Woes

29 May 2012 11:00am - Florence Fullalove

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Canada’s Economy Vulnerable To European Woes

Canada’s Finance Minister Jim Flaherty has said that the Canadian economy is vulnerable to any collapse of European banks because of the large impact it would have on America. Flaherty made his comments following the news in Spain where the government bailed out its fourth largest bank, Bankia for $24 billion. Flaherty said, “The exposure of Canadian banks to European banks is modest. If there are shocks emanating from the European banks to the global situation, to the American banks, then there of course would be consequences in Canada.”

The minister said that there was little Canada could do to help Spain, the fifth largest economy in Europe. Spain is the latest casualty of the Europe crisis that could potentially choke trade and investment in Canada if there is a domino effect. However, Flaherty said Canada can prepare for any contingency and the country has the experience of the 2008-09 meltdown to draw form. He said, “We did not have to bailout out our financial institutions...so we know what steps are available to be taken.” He concluded that legislative changes to strengthen the Bank of Canada and the Finance Department will help him “act expeditiously, if we need to act.”

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