A global banking crisis will erupt unless Europe properly deals with Greece's debt problems, Finance Minister Jim Flaherty said on Wednesday, notably hardening his criticism of European authorities.
Flaherty said finance ministers of the Group of 20 nations would focus on Greece when they meet in Washington on Thursday. Finance ministers from the smaller Group of Seven also discussed Greece when they met in France earlier this month.
The number one thing we'll talk about tomorrow night at dinner - as we did in Marseilles with the G7 - is that Europe has to pick a lane here, they've got to deal with that issue respecting Greece, he told the Canadian Broadcasting Corp.
Otherwise the markets will get ahead, we will have some sort of a crisis, it will become a banking crisis, it will affect banks all around the world, we could be into another credit crisis which will cause contraction in the real economy. So we've got to deal with that, he said.
Flaherty said European nations could get ahead of the game if they were prepared to increase the euro zone's bailout funds to 1 trillion euros from 440 billion euros.
The BRICS emerging economies -- Brazil, Russia, India, China and South Africa -- might offer support to the euro area, possibly by buying bonds, although it is unclear if they would come up with a firm plan to do so.
The G20 is a wider group, which is good for this discussion. We may want the BRIC countries participating through the IMF, said Flaherty, without giving details.