OTTAWA (Reuters) - The European Central Bank’s move to stop providing liquidity to some Greek banks is not good news, Canadian Finance Minister Jim Flaherty said on Wednesday, expressing fresh concerns about the future of the euro zone.
The ECB confirmed it had cut off some Greek banks as they are severely undercapitalized. The news sent the euro lower against the U.S. dollar, fanning fears the country may have to leave the euro zone.
“These are not good developments, this can create a shock that will affect Canada ... our banks are strong but we’re not completely immune from the state of the global economy,” Flaherty told the Senate’s banking committee.
Canadian stocks erased gains and traded weaker after the latest news from Europe, led by declines in banks and other financial services companies. .TO
Flaherty, who suggested this week that the European Union might have to abandon its single currency, said the current crisis marked a turning point for the euro zone.
“It’s a fundamental issue for the euro zone about whether they intend to keep the euro zone together, whether they intend to keep all of the members in the eurozone,” he said.
Reporting by David Ljunggren; Editing by Jeffrey Hodgson