UPDATE 2-Bank of Canada's Carney says Europe needs big reforms

Tue May 21, 2013 3:58pm EDT
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* Bank of Canada chief says Europe should learn from Japan

* Final speech before Carney leaves for Bank of England

* Says tightening bias aimed in part at household debt

* Says the considerable stimulus now in place is appropriate

By Leila Lemghalef

MONTREAL, May 21 (Reuters) - Europe could face a decade of stagnation unless it makes big reforms and it should heed the lessons of Japan, Bank of Canada Governor Mark Carney said on Tuesday as he highlighted Japan's bold moves to bolster growth.

In his final speech as Canadian central bank chief before he takes over as governor of the Bank of England on July 1, Carney said Europe's recessionary economy is being held back by fiscal austerity, low confidence and tight credit conditions.

"Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens," Carney said in the speech, given in Montreal.   Continued...