Canada Policy Makers Press Banks to Unlock Credit

(Reuters – Louise Egan)

Canada’s finance minister and central bank chief will lean on banks to keep loans flowing to companies and consumers in a meeting scheduled for early January, Finance Minister Jim Flaherty said on Thursday.

Flaherty also said additional tax cuts by the federal government are on his agenda for the January 27 budget, alongside increased spending in areas such as infrastructure.

He made the remarks to reporters in Saskatoon after announcing the creation of an economic advisory council, comprised of 11 high-profile business and financial experts, to help him sort through various spending and taxation ideas.

Both Flaherty and Bank of Canada Governor Mark Carney urged banks publicly on Wednesday to avoid hoarding capital and keep credit flowing to businesses and households during the tough economic times.

“He (Carney) and I are meeting with bank CEOs at the beginning of January and I expect them to make it evident to us that they are taking steps to make credit more available in Canada,” Flaherty said.

Banks are under market pressure to raise their capital levels even though they are higher than required by regulators and above average by global standards.

The lack of credit availability emerged as a top priority for provincial finance ministers in a meeting with Flaherty on Wednesday. Read the complete article at here.