Flaherty Says Greek Crisis Worse, Warns of Meltdown

The Greek debt crisis is getting worse rather than better, Canadian Finance Minister Jim Flaherty said on Monday as he urged European leaders to take clear and decisive action to avoid a banking meltdown.

Ultimately the whole world would be affected if there were a bank meltdown, a credit crunch, coming out of Europe. So this is a serious situation and it's been serious for quite some time. It's getting worse because of the continued uncertainty, Flaherty told Sun TV.

It is quite frustrating and that's why we're trying to impress on them (European leaders) that these are extraordinary times - you can't follow normal processes.

In earlier remarks at a news conference, he urged European ministers meeting on Monday to be decisive and remove uncertainty on Europe.

We want them to take the bull by the horns here, deal with the issues, be clear about what they're doing and bring it to a conclusion, the Conservative minister said.

Greece's admission that it would miss its deficit target this year despite harsh new austerity measures sent stock markets reeling on Monday and raised new doubts over a planned second international bailout.

Canada's bank exposure to Europe and particularly Greece is relatively small, Flaherty said, but knock-on effects to the world economy can be difficult, and that's what we've been worried about constantly with respect to Greece and some of the other largely indebted economies in Europe.

He added: We want the euro zone members to be decisive, to remove the uncertainty, and to be clear in their commitment about what they're going to solve the problem. This problem is soluble in Europe, and it's up to the Europeans to solve it.

Flaherty will make a speech at a financial conference in New York on Wednesday and he said he would urge European bankers there to move forward on the debt crisis.

He repeated his government's willingness to launch new economic stimulus measures if necessary, but he said government fiscal policy is already stimulative and more measures are not required at present.