November 30, 2011 / 2:14 PM / in 6 years

Flaherty tells Europe to fight crisis with own money

NEW YORK (Reuters) - European leaders should not expect outside help until euro zone countries have put up more of their own resources to try to stem their financial crisis, Canada’s finance minister said on Wednesday.

Finance Minister Jim Flaherty said it was not the right time for euro zone countries to turn to the International Monetary Fund for help.

“Nothing happens, from our point of view,” until the euro zone countries commit more of their own resources to end the crisis, Flaherty told Reuters Insider on the sidelines of the Toronto Financial Services Day conference in New York

His comments came as soaring bond yields for some euro zone countries and vanishing liquidity in the European markets prompted central banks around the world to broaden their liquidity swap agreements with each other and lower swap rates.

Finance ministers agreed on Tuesday night on detailed plans to leverage the European Financial Stability Mechanism (EFSF), but could not say by how much because of rapidly worsening market conditions, prompting them to look to the IMF.

Flaherty said asking for IMF aid was inappropriate.

“These are rich countries,” Flaherty said. “The IMF’s first responsibility is to poor countries.”

Flaherty said he saw a potential IMF role in the euro zone crisis as one of a monitor. He said the organization could help ensure that heavily indebted countries enacted the fiscal reforms they pledged to make and worked toward balancing their budgets.

The IMF could also use its funds to help poorer countries deal with any “knock-on effects” the euro zone crisis might produce, he said.

He added leaders within the euro zone needed to act quickly.

“Delay has been the enemy” in the euro zone crisis, he said.

Flaherty added richer countries like Germany, which have been hesitant to bail out apparently more profligate neighbors such as Greece, would have a hard time if they continued to resist contributing more aid while still trying to hold on to the euro.

Editing by Andrew Hay

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