Canada has been taken to task recently for its boastful and hectoring attitude towards Europe, but Flaherty's speech shows no let up.
OTTAWA—Finance Minister Jim Flaherty is urging European leaders to agree quickly on a plan to rescue the common market, preventing a major global crisis.
The Canadian minister issued the appeal at a speech in Galway, Ireland as European leaders began emergency talks in Brussels.
Flaherty says in notes from the speech that the world is watching and hopes Europe’s leaders understand what is needed, and that they take bold action.
Canada has been taken to task recently for its boastful and hectoring attitude towards Europe, but Flaherty’s speech shows no let up.
He says Europe has boxed itself in a corner by failing to take decisive action earlier, but still has the means to avert a catastrophe.
Specifically, he says Europe needs to build a sufficiently large emergency fund to prevent private banking problems from swamping government treasuries.
And he says banks must be fully capitalized, using taxpayer funds if necessary.
Finally, he says Europe must build a closer union by enacting fiscal consolidation measures forcing indebted countries to give up some control over national budgets.
Flaherty does not mention the idea of a euro bond supported by many countries, but opposed by the leader with the most clout, Germany’s Angela Merkel.
In Brussels, European Commissioner for Economic Affairs Olli Rehn said he expects leaders will agree on new growth initiatives and on measures to reduce borrowing rates for Spain and Italy, which are approaching unmanageable levels.
Flaherty says there will be no solution to the crisis until European leaders can convince markets they have a workable plan to deal with the debt issues.