G20 not setting Greek emergency measures: Flaherty

Tue Oct 4, 2011 10:51am EDT
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By David Ljunggren

OTTAWA (Reuters) - The Group of 20 nations is discussing Greece's ability to deal with its debt but is not preparing emergency measures in case the struggling nation defaults, Canadian Finance Minister Jim Flaherty said on Tuesday.

Flaherty once again urged his European colleagues to take decisive action on the euro zone's debt problems, which continued to send global financial markets tumbling on Tuesday.

The Canadian minister appeared to play down earlier comments from a South Korean official, who said discussions were under way in the Group of 20 rich and developing nations to supply liquidity to the global financial system.

"No, we're not preparing emergency measures. We've had continuing discussions on the issue of Greece's ability to pay. There are important decisions to be made by the euro zone ministers," Flaherty told reporters in Ottawa.

A top German official on Tuesday repeated opposition to using the European Central Bank to leverage the European Financial Stability Facility, raising doubts that the bailout fund can be sufficiently scaled up to calm markets.

"We have advocated for flexibility with respect to the size of facility that the euro zone has agreed to create, and we think that's important in order to have the euro zone in a position where it can overwhelm the situation," Flaherty said.

"This situation has been evolving since at least January 2010 ... it is time for the euro zone countries to deal with that situation."

The finance minister said volatility in the Canadian dollar is always a concern, but that its recent slide reflected safe-haven flows to the U.S. dollar and was not surprising.   Continued...

<p>Canada's Finance Minister Jim Flaherty speaks to journalists in the foyer of the House of Commons on Parliament Hill in Ottawa September 22, 2011. REUTERS/Chris Wattie</p>