Friday, October 24, 2008

"Modest" lessening of credit tightness seen: Flaherty

Courtesy CBC News

The measures are aimed at helping Canadian banks weather the storm during the global financial crisis sparked by the collapse of the credit market in the United States. Flaherty noted that some "modest" lessening of the tightness in the world's credit markets has been seen this week.

"By having the guarantees in place, it means that the costs of funds between banks is under control again, and, therefore, the banks are able to pass the benefit on to us, as borrowers," Glen Hodgson, chief economist with the Conference Board of Canada, told CBC News.

Flaherty insisted Canada's financial institutions are healthy, pointing out again that the country's banking requirements are stringent.

"The government of Canada will never allow Canada's financial system, which has been ranked as the soundest in the world, to be put at risk by global events," he said.

Earlier this month, Flaherty announced the government's $25-billion takeover of bank-held mortgages to ease a growing credit crunch and free up money for financial institutions to lend to Canadians.

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