OTTAWA (Reuters) - Canada is not immune to the “considerable stress” that is rocking financial markets, but it is weathering the storm better than many other countries and its financial sector is well capitalized, Finance Minister Jim Flaherty said on Wednesday.
In a statement, Flaherty said he was in close contact with U.S. Treasury Secretary Henry Paulson and other finance ministers of the Group of Seven leading industrialized nations, as well as Bank of Canada Governor Mark Carney and Canada’s Superintendent of Financial Institutions.
“I will continue to monitor the situation closely,” said Flaherty, who is currently campaigning ahead of the October 14 general election.
“The Bank of Canada has taken action to ensure the liquidity of the banking system, and indicated that it stands ready to provide further liquidity to Canadian markets as required.”
The S&P/TSX financial index of banks, insurance companies and other financial issues has fallen 9 percent over three days. The broader S&P/TSX composite index .GSPTSE was down 349.30 points, or 2.86 percent, at 11,877.69 on Wednesday amid widening worries about the U.S. financial crisis.
But Flaherty sought to assure markets that Canada’s situation was better than that in the United States, where some of Wall Street’s biggest names were going bankrupt, being taken over, or being bailed out by Washington.
“Canada continues to weather the global financial market turbulence better than many other countries. I would emphasize that Canada’s banking and insurance industries are well capitalized and our financial system is sound,” he said.
“The International Monetary Fund has determined that Canada’s financial system is resilient and that the stability of our system is well supported by sound macroeconomic policies and strong prudential regulation and supervision.”
Reporting by Lynne Olver and Randall Palmer; editing by Rob Wilson