Bank of Canada calls for Greek crisis "firewall"

Reuters
June 22, 2011

The Bank of Canada joined the government on Wednesday in calling for a "firewall" around Greece to ensure its debt crisis does not spill over to infect the global financial system.

Central bank chief Mark Carney said the Greek situation was "manageable" but warned that if it were to deteriorate the risk to Canada would be "considerable", through indirect linkages with banks in other countries.

"We would also join with others in urging that an effective firewall can be set up between possible events in Greece and other parts of the European financial system and therefore by extension the global financial system," Carney said in testimony to the Canadian Senate committee on banking, trade and commerce.

"While the situation in Greece is very serious, and it is very difficult for the Greek people, for the Greek government, and the cost of default would be considerable, in the context of the European Union, this is a manageable issue," he said.

More