* Canadian Fin Min warns of 'full-blown global crisis'
* Says 'disappointed' Germany sees no weekend breakthrough
By Conor Humphries
DUBLIN, Oct 17 European leaders are running out
of time to prevent euro zone debt problems turning into a
full-blown global crisis, Canadian Finance Minister Jim Flaherty
said on Monday after Germany warned a breakthrough was unlikely
at a summit this weekend.
Financial markets have risen in the past week on hopes that
a firm plan to draw a line under the two-year-old crisis would
be struck at a European Union summit on Sunday, but Germany
lowered expectations of a breakthrough on Monday. ID:nL5E7LH1GL]
Speaking at an event in Dublin, Flaherty said that if the
crisis was left unaddressed, it would eventually become too big
for Europe to solve and immediate action was therefore needed to
stop the crisis from becoming even more costly.
"This is the world's most immediate and pressing problem.
It threatens Europe, and it threatens the strong, sustainable,
and balanced growth that G20 countries have made their
priority," Flaherty said in a speech.
"Sadly, time is running out and the message still needs to
be repeated ... Unless decisive action is taken urgently, our
nations will once again be forced to respond to a full-blown
Asked about German Finance Minister Wolfgang Schaeuble's
warning on Monday that there would be no definitive solution at
this weekend's meeting, Flaherty said he was "disappointed."
"This situation does not improve with time. This is not a
fine wine," he said.
Flaherty said Europe must take action to resolve sovereign
debt and banking system issues -- including recapitalising banks
-- that proves decisive enough to overwhelm the problem and
restore market confidence.
He said it must also implement plans for debt and deficit
reduction that are clear, credible and fearless, and decide
whether it will support Greece unequivocally or face the natural
consequences of not doing so.
The Canadian finance chief told Irish radio earlier on
Monday that European banks would probably have to take larger
write-downs on Greek debt and must negotiate haircuts as big as
necessary to resolve what has become a very dangerous situation.
He added that Europe could have contained the crisis but
instead let it grow due to a disappointing response and that the
state rescue of Franco-Belgian lender Dexia SA should
be a sufficient signal that action is needed now.
"The good news is that this crisis can still be contained
and reversed, if nations summon the determination to do so. The
bad news is that this crisis has already cost way too much,"
"Too much time has been wasted. Too many opportunities have