* G7 finance ministers, central bankers to talk Tuesday
* Flaherty says also talking to non-European G20 colleagues
* G7 source cites “heightened alarm” over Europe
* June 18-19 G20 summit to discuss euro crisis
By Allison Martell and Leika Kihara
TORONTO/TOKYO, June 4 (Reuters) – Finance ministers and
central bank governors of the Group of Seven (G7) industrialized
nations will hold a conference call on Tuesday morning, a
Can adian gov ernment spokeswoman said on Monday, ami d increased
concern about the European debt crisis.
“There’s a heightened sense of alarm over developments in
Europe, particularly in Spain,” said one G7 source, speaking on
condition of anonymity due to the sensitivity of the matter.
However, he said that with U.S. unwillingness to provide
International Monetary Fund money to help Europe, there was
little sense the global community could act as one to contain
the crisis.
Canadian Finance Minister Jim Flaherty, asked whether the
crisis was an issue for the Group of 20 (G20), t old reporters in
Toronto: “I’ve been having discussions and I will have more
discussions tomorrow morning and subsequently with my G7
colleagues.”
He added: “Those discussions also take place with some of
the non-European members of the G20 … who are concerned around
the world outside of the euro zone with the potential
consequences of a crisis in the euro zone, particularly a
banking crisis.”
Flaherty spokeswoman Mary Ann Dewey-Plante clarified that no
ministerial talks were scheduled so far for Tuesday of the G20,
which includes the G7 as well as China, India, Russia, Brazil
and other emerging and developed nations.
The G7 source said there was concern about whether there
would be a bank run in Spain that could have repercussions
beyond the euro zone.
A senior Brazilian government official said the debate over
fiscal restraint versus stimulus would be prominent in any G20
talks.
“We insist on our position that European countries which
have enough space to stimulate the economy, even via fiscal
stimulus…, should do it now,” said the official, who will
be at the June 18-19 summit in Mexico.
The Brazilian recognized that not many countries had fiscal
room to add stimulus, and was referring mostly to Germany.
On Monday, financial markets were rattled by the deepening
problems in the euro zone, as well as by recent disappointing
U.S. jobs data and weak Chinese manufacturing figures, all of
which spurred more concern about the global growth outlook.
Flaherty said Canada’s economy was in relatively good shape
compared with other industrialized nations, although he noted
that employment data has been “a bit bumpy” in recent months,
and that Canada could be hit by Europe’s troubles.
“The real concern right now is Europe of course – the
weakness in some of the banks in Europe, the fact they’re
undercapitalized, the fact the other European countries in the
euro zone have not taken sufficient action yet to address those
issues of undercapitalization of banks and building an adequate
firewall,” he told reporters.
