Canada to G7: let markets solve credit crisis

Wed Apr 9, 2008 2:24pm EDT
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By Louise Egan

OTTAWA (Reuters) - Canada agrees with recommendations for solving the global credit crisis that will be put forth at a Group of Seven meeting this week, and will push for a market-led approach to regulatory reform, officials said on Wednesday.

Finance Minister Jim Flaherty said there were some differences of opinion among G7 officials on some of the 65 recommendations contained in the report by the Financial Stability Forum, a body that the G7 asked to draft a report on the causes of the current global credit turmoil and propose recommendations for averting future market breakdowns.

The report will be discussed by Group of Seven finance ministers and central bank governors at a meeting in Washington on Friday.

Flaherty, a Conservative, resisted any idea of government-imposed regulatory reform, saying he preferred solutions spawned by market players.

"Clearly our preference is for private-sector resolutions," he said.

"A lot of the recommendations (in the FSF report) are just that, they're about authorities within countries that 'ought to' or 'should' or 'could' do things," Flaherty told reporters.

"I expect there will be an emphasis by some of the ministers ... that there should be more strength in some of the recommendations ... I expect the recommendations of the FSF, perhaps amended somewhat, will be adopted by the ministers and the central bankers."

Flaherty's comments are in line with those of the Institute of International Finance, a top global financial services association, which on Wednesday proposed tougher standards for the banking industry but suggested self-policing as the best route to get there.   Continued...

<p>Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Parliament Hill in Ottawa March 31, 2008. REUTERS/Chris Wattie</p>