The following guest column by the Honourable Jim Flaherty, Minister of Finance, appeared in the March 30 edition of The House Magazine, the weekly magazine for the United Kingdom’s Houses of Parliament. It appeared as part of a special feature to mark the G20 summit in London.
"As G20 leaders gather together in Britain, they do so amidst a synchronised global recession. The speed and synchronicity of the deteriorating international economy has been nothing short of stunning. What began as a financial crisis has quickly evolved into an economic crisis threatening all G20 members.
"Fortunately, G20 nations have responded with decisive, coordinated and concrete actions. Central banks heeded the call to provide liquidity and support financial markets. Governments have provided extraordinary stimulus, recognising that fiscal boosts work best when they work in harmony with others. Finally, G20 leaders pledged early on that they would fight protectionism and maintain open trade and investment.
"Canada played a leading role in these efforts. The stimulus provided in our Economic Action Plan fulfils our G20 commitment to provide timely stimulus to domestic demand while maintaining long-run fiscal sustainability. The numerous initiatives comprising our Extraordinary Financing Framework will improve access to the domestic financing needed to invest, grow and create jobs.
"Canada can make these substantial investments, and plan to eliminate the resulting short-term deficits, thanks to the prudent decisions of the past. Canada entered recession after more than a decade of balanced budgets and significant debt reduction, which means our structural position remains sound and our net debt burden remains below other G7 countries.
"On the financial side, Canada’s exceptionally resilient system has been widely recognised as an international role model. Canada’s banks and other financial institutions are sound and well-capitalised, and are less leveraged than in other countries. The financial position of Canadian households and businesses remains stronger than in many other industrialised nations.
"However, our collective crisis will not subside until the economic and financial problems each country faces are addressed. In a November article in the Financial Times I stressed that effective national regulatory regimes could have prevented this crisis, and must be the first line of defence against future ones. We must steadfastly resist protectionist measures, no matter how domestically alluring they might appear. Canada’s recent budget, which permanently eliminated tariffs on a wide range of machinery and equipment, is evidence of our open trade commitment.
"G20 members are making great strides in responding to global economic strife. Canada and India, for example, are co-chairing one of the four working groups set up following the November G20 leaders’ summit, on enhancing sound regulation and strengthening transparency in the financial sector. While all countries have an interest in stronger oversight, in the midst of a crisis, we must first make better use of the mechanisms that exist, before we engage in a significant overhaul of international regulation. If we are to create a brighter future for the generations that follow, we must keep our focus firmly on pragmatic solutions that will eliminate the uncertainty now preventing the global economy from moving forward. A commitment to what is necessary, and what is possible, will lead to long-term solutions that will be beneficial to us all."
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