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Canada Says Greece Could Lead to Global Banking Crisis

Canada’s Minister of Finance, Jim Flaherty stated on Wednesday that the eruption of global banking crisis is very possible, unless Europe properly deals with Greece’s debt problems.

Jim Flaherty also said that Ministers of Finance of the 20 largest industrial and emerging countries (G20) will focus on Creece’s crisis during their meeting in Washington on Thursday. Additionally, Ministers of Finance from the smaller Group of Seven(G7) also discussed the economic problems of Greece when they met in France earlier this month.

“Our number one priority is to talk about – as we did in Marseilles with the G7 – tha fact that Europe has to decide and deal with the current issue concerning Greece,” Flaherty told the Canadian Broadcasting Corp.

“Otherwise it will become a banking crisis, it will affect banks all around the world, we could get into a new credit crisis, leading to a contraction in the real economy,” Flaherty said. He advised to expand the volume of the European rescue fund of 440 billion to 1 trillion €.

The BRICS emerging economies – Brazil, Russia, India, China and South Africa – might offer support to the Euro Zone, possibly by purchasing bonds, although it is unclear if a set plan will be drawn up.

“The G20 is a wider group, something that is very positive for this discussion. We may want the BRIC countries participating through the IMF,” concluded Flaherty, without giving details.

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