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TORONTO (Reuters) - A summit of world leaders in Washington starting on Friday is unlikely to be paralyzed by a clash over the merits of free market capitalism, Canada Finance Minister Jim Flaherty said.
Much of the groundwork has been laid for a productive discussion when heads of the 20 largest economies meet to discuss easing the economic downturn and preventing a repeat, despite differences over how far to take re-regulation, Flaherty told broadcaster CBC.
Canada and the United States have lined up in favor of a moderate approach to shoring up the ailing global financial system, saying a complete overhaul like that proposed by some European and emerging nations would go too far.
Global markets have been hit hard in recent months by a severe credit squeeze which emanated from soured mortgages in the U.S. housing market.
U.S. President George W. Bush on Thursday offered a vigorous defense of the free market system on the eve of the Group of 20, or G20 summit, but acknowledged there should be some reforms to correct the problems that led to the crisis.
Canada's Flaherty has said Ottawa supports sound domestic regulation of financial institutions and that its own model could be used by other countries.
He added that Ottawa favors using existing institutions to oversee the global financial system and would like the International Monetary Fund's early warning system for alerting failures to become mandatory.
Reporting by Ka Yan Ng; Writing by Richard Valdmanis; Editing by James Dalgleish