TORONTO (Reuters) - Canadian Finance Minister Jim Flaherty threw his support on Wednesday behind the International Monetary Fund’s call for coordinated efforts to end the global credit crisis, and said Canada’s financial system is a model to follow.
He told reporters in Toronto that the IMF meeting in Washington this week would act as a venue for countries to further their work together.
“We’ll have well over 100 countries there, including all of the member countries in the G20, so this will be an opportunity to have expanded discussions beyond the G7,” he said.
He also said he supports French President Nicolas Sarkozy’s call for a global financial conference on the matter.
The IMF said earlier in the day that the ongoing financial upheaval would continue to weigh on world economies as markets wrestle with a crisis of confidence and credit evaporates.
The result, it said, would likely be a major global economic downturn, but not a recession. It slashed its 2009 global growth forecast to 3 percent, the slowest pace in seven years, from a July projection of 3.9 percent.
The IMF’s forecast was delivered before the Bank of Canada joined central banks in the United States and Europe to cut interest rates by half a percentage point, moves aimed at freeing up liquidity.
“I welcome the strong international coordination that central banks have displayed throughout the financial crisis, most clearly expressed in the coordinated rate cut today,” Flaherty said. “The same commitment to cooperation needs to be reflected by finance ministers.”
He said that it is important that uniform standards be created so financial institutions have confidence in each other and feel comfortable lending to each other. He pointed to Canada’s financial system as a model.
“Our lessons with respect to requiring substantial capitalization in our financial institutions is, I think a lesson that other G7 countries might want to look at as a way of avoiding a meltdown of certain financial institutions that has been the experience elsewhere, but not in Canada.”
The IMF blamed lax economic and regulatory policies for the current global predicament, saying they may have led to the global economy to “exceed its speed limit”.
Flaherty said that while Canada is not immune to the financial turmoil, he still expects its economy to grow modestly.
Reporting by John McCrank; additional reporting by Lynne Olver; editing by Peter Galloway