Canada calls for "firewall" to contain Greek crisis

Wed Jun 22, 2011 1:47pm EDT
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OTTAWA (Reuters) - Finance Minister Jim Flaherty called on Wednesday for the erection of a "firewall" to prevent Europe's debt crisis from spreading beyond Greece, saying that the Greek situation could still unravel.

European leaders were keeping up the pressure on Athens on Wednesday to push forward with an austerity program after the Greek government's survived a parliamentary confidence vote earlier in the day.

"The danger is that the Greek situation unravels and that that would have a contagion effect on European banks," Flaherty told reporters. "That's obviously the danger. There's no secret (about) that. Everybody's concerned about that, so we want to make sure the situation's contained."

He called for "a plan that would create a firewall that would ensure that this type of issue would not spread beyond Greece."

Flaherty said he was sure Group of Seven finance ministers and/or central bankers would hold more conference calls on Greece's debt situation.

"The concern now is with the situation in Europe, and making sure there's a strong, clear voice in Europe and a clear plan, a clear way forward, so that we do not have this situation of potential contagion in Europe," he said.

On the Canadian economy, he said: "We're not out of the woods yet on the economy. We have to be careful going forward."

He reiterated that Canadians need to be careful about taking on too much debt, since interest rates will go up.

(Reporting by Randall Palmer; editing by Peter Galloway)

<p>Canada's Finance Minister Jim Flaherty delivers his budget in the House of Commons on Parliament Hill in Ottawa June 6, 2011. REUTERS/Chris Wattie</p>