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Canada Finance Minister:G20 Must Coordinate Planning Exit Strategies

OTTAWA -(Dow Jones)- Canadian Finance Minister Jim Flaherty said Thursday G20 countries have to coordinate planning stimulus exit strategies.

"That's important so that one country's banking system isn't advantaged over another country's banking system as we exit from this period of stimulus, which isn't going to happen for a while," Flaherty told reporters.

He expects G20 finance ministers and central bank governors to discuss exit strategies at their weekend meeting in St. Andrews, U.K. He cautioned, "Not that it's time to implement exit strategies but that we coordinate our planning in terms of exit strategies."

Regarding moral hazard when some banks are seen as too big to fail, Flaherty said there are different views on the issue among the G20. Some favor preserving and protecting systemically important banks and another group wants such banks to have "living wills" to deal with life-threatening events.

There is also a view that designating some banks as systemically important implies that other banks are less key, he said.

Flaherty said Canada is "concerned about the discrimination between institutions."

He said it's not so much a Canadian problem because the country has a sound banking system, but "we are conscious of that danger of some institutions feeling that they could act without reproach, and without consequence."

Flaherty said the ministers and central banks will also have a substantial discussion about financing of climate change.

-By Nirmala Menon, Dow Jones Newswires; 613-237-0668; nirmala.menon@ dowjones.com

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  11-05-091842ET
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