DRESDEN, Germany (Reuters) - Canada sees an increased potential for financial market instability, in part due to the rise in value of the U.S. dollar, Finance Minister Joe Oliver told reporters on Thursday.
Speaking on the sidelines of a meeting of the finance chiefs from the Group of Seven countries, Oliver said that Canada was also worried about the persistent downside risks posed by geopolitical tensions as well as the potential for the Greek crisis to threaten Europe’s recovery.
Oliver said Canadian Prime Minister Stephen Harper had raised his concerns in a letter to German Chancellor Angela Merkel. A spokeswoman for Oliver said the letter was recent but did not have more details.
Oliver said the global recovery was one of the weakest on record as many nations struggled with the aftermath of the great recession.
He quoted Harper as telling Merkel: “Growth is uneven and we see increased potential for financial market instability from the stronger U.S. dollar as well as persistent downside risks over geopolitical tensions.”
Oliver said members of the broader Group of 20 nations needed to make good on promises to boost their economic growth and deal with what he called chronically high public debt.
Canada, he said, backed Germany’s call for the G7 nations to repair balance sheets.
Greece and its lenders - trying to avoid a default by Athens that could rock the euro zone - have been holding talks on a possible reforms deal for four months.
G7 finance ministers are due to hold an informal discussion on Greece on Friday.
”There’s a short-term liquidity issue ... and there’s a longer term issue related to getting Greece on a sustainable path so that five years from now we don’t have this same conversation,’ said Oliver.
In his letter to Merkel, Harper said he was “concerned about the situation in Greece and its potential to threaten Europe’s recovery”.
Reporting by David Ljunggren; Editing by Michelle Martin