May 7, 2010 / 8:56 PM / 7 years ago

Flaherty says G7 watching Europe closely

3 Min Read

TORONTO (Reuters) - Canadian Finance Minister Jim Flaherty said on Friday that Group of Seven finance ministers were watching the Greek debt crisis with concern and that several euro zone countries need to exercise fiscal restraint.

"It's necessary that, first of all, that the countries involved take the steps they need to take and be clear about that, that they're going to take these steps toward fiscal restraint, fiscal responsibility. They will need some help, in all likelihood, in order to manage the issue as Greece did," he told reporters in Toronto.

"We are hopeful that there will be a strong policy response in Europe, the sooner the better," he said.

The comments come hours after the G7 finance ministers, in a call chaired by Flaherty, agreed to keep a close eye on financial turmoil caused by the Greek debt crisis.

Flaherty said the discussions were productive, but declined to give details, and said more talks were likely to take place on the weekend.

"We're also watching the economic developments in Europe closely ... we are concerned. We're consulting closely with our international partners," Flaherty said.

"Everyone understands the need for a clear, timely and strong response," he said.

Debt-stricken Greece has caused waves of volatility in financial markets, highlighted by Thursday's highlighted by Thursday's market rout, with fears mounting that Greece's difficulties will widen to other euro zone countries.

The Canadian finance minister said there were "remaining concerns" about Thursday's volatility on currency and equity markets.

He also said he had been in touch with U.S. Treasury Secretary Timothy Geithner, who spoke for the second day in a row with the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission about Thursday's market swings, which saw U.S. stocks plunge as much as 9 percent.

Flaherty repeated that Canadian banks' exposure to the European debt crisis was relatively small and contained, and said Canadians could have confidence in their country's sound fiscal position.

He also said that Canada's record jobs creation data on Friday was an "encouraging" sign, but added that too many people were still unemployed, while the global economic recovery was still fragile.

Reporting by Ka Yan Ng and Jeffrey Hodgson; editing by Rob Wilson

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