Canada’s Flaherty says resolution on financial sector reform unlikely at Toronto G-20 summit

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Canada finance chief: Work needed on bank reforms

NEW YORK — Days ahead of a meeting of heads of major industrial economies, the Canadian finance minister urged the Group of 20 nations to focus on setting targets for cutting their deficits and said that the summit was not likely to result in a resolution on financial reform.

President Barack Obama, Chinese President Hu Jintao and other leaders and finance ministers of 19 major countries and the European Union plan to meet starting Saturday in Toronto.

Canada’s Finance Minister Jim Flaherty, speaking in New York, praised China for saying this past Saturday that it will allow greater flexibility in its exchange rate.

China’s move, which could allow the yuan to rise against the dollar, was “quite encouraging,” he said, hinting that China may be pressed over the weekend for more information on how it will let the yuan appreciate. “I think some countries will want to see more detail…a schedule of some sort,” he said.

Flaherty said he did not expect a resolution at the Toronto meeting on leverage caps for financial institutions or new rules on bank capital.

“On financial sector reform, the mandate from the chiefs of state was that we arrive at a solution…by the end of this year,” Flaherty said. While he said “an intense amount of work” had been done, the G-20 is “not yet there in terms of resolving those issues.”

The G-20 heads of state plan to meet in November in South Korea.

Flaherty also said the G-20 should not focus on the bank taxes Germany and France are pushing for, calling them “punitive” taxes on financial institutions that would hurt credit availability.

The majority of countries in the Group of 20 would not implement these kinds of bank taxes, he said.

He pressed instead for other G-20 nations to focus on making plans for cutting their deficits, saying he wanted to see “clear targets.”

Canadian Prime Minister Stephen Harper said in a letter released Friday that leaders should agree to cut deficits in half by 2013 and stabilize or work on lowering debt-to-gross domestic product ratios.

On Monday, the Canadian government said the outlook of private economists for Canada had improved. Economists surveyed in June said they expect real growth in Canada’s gross domestic product of 3.5 percent this year, up from 3.1 percent in March. Canada’s budget had forecast 2.6 percent growth for this year.

Economic growth will slow to 2.9 percent in 2011, down from the March estimate of 3.1 percent, the 14 economists said.