Canada injects billions into markets to ease credit crunchOctober 4th, 2008 - 9:09 am ICT by IANS
Toronto, Oct 4 (IANS) With credit squeeze hitting Canadian markets, the Bank of Canada Friday announced injection of billions of dollars into term lending markets even as the finance claimed that the Canadian economy was doing fine.In a statement, the nation’s central bank said that beginning Sept 19 it has extended $8 billion to provide liquidity to term lending markets.
In light of persistent pressures in these markets, the bank announced further steps to provide term liquidity through term purchase and resale agreements (PRAs), allowing commercial lenders access to funds for terms up to 91 days.
The bank said it will hold weekly auctions through to the end of the year, expecting the minimum total amount outstanding to reach $20 billion by Nov 6.
Meanwhile, finance minister Jim Flaherty said Friday that despite its dependence on the US for trade, the Canadian economy was doing fine and faced no immediate threat.
“We are in a good position as we enter this time of international financial market turbulence,” said Flaherty, speaking at the University of Western Ontario.
He said, “This is a dynamic economy and there will be some businesses that close and there’ll be some new business that will open. Fortunately in Canada we’re on the plus side.”
Welcoming the $700-billion US bail-out of Wall Street, he said the current mess was the result of the bad fiscal policies followed by the US which has been running a huge public debt for some time.
On the contrary, he said, Canadian fiscal policies were much more prudent than those in the US.”We are solid fiscally, the most solid in the G7; others look on Canada as being a model of fiscal prudence. We are in much better shape.”
The minister outlined a long-term, national economic plan which focused on five key areas - tax, fiscal, infrastructure, entrepreneurial and knowledge.
“The knowledge advantage is fundamental to economic growth in Canada over the course of the next generations. We need excellence in education and skills; the necessity is to educate,” he said.