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VANCOUVER, British Columbia (Reuters) - There are indications the global financial system has begun to stabilize, which is needed for the rest of the economy to recover, Bank of Nova Scotia's chief executive said on Tuesday.
"My sense is that the financial system, and this includes globally, is beginning to stabilize. So economies will stabilize, I expect, near the end of the year," Richard Waugh told a business gathering in Vancouver.
Stabilization of the financial systems will allow consumers and businesses to take advantage of economic stimulus actions being taken by governments around the world, Waugh said.
The head of Canada's third largest bank said he is also seeing signs that bond markets have begun to recover, adding: "we get that happening, then the equity markets will take care of themselves.
Waugh said that while he is disappointed by the payment of executive bonuses at troubled U.S. insurer AIG as it accepts massive U.S. bailouts, he is also worried that lawmakers will overreact and cause unintended problems for the rest of the financial sector.
"If a ship has to be turned around, you're going to need a crew. Before you tell the exiting crew they are no longer needed you had better have your new crew ready, able and trained to do that," Waugh told reporters.
Reporting Allan Dowd, editing by Rob Wilson