OTTAWA - Bank of Canada Governor Mark Carney is making no apologies for speaking out forcefully against European inaction as divisions bubbled to the surface on the eve of an emergency meeting on the region's debt crisis.
In an interview with CBC news anchor Peter Mansbridge, the Canadian central banker said Europe's failure so far to arrest the problem is putting the economies of Canada and other countries at jeopardy, and suggested he and other critics outside the continent may have the best perspective.
"We have a huge vested interest in what happens in Europe. It's not an intellectual curiosity, it's really going to matter ultimately to Canada and pretty quickly if they don't get this right," Carney says.
"So we have a right to be heard on this, just as Brazil and China and Australia and South Africa do and they're making themselves heard on this as well. And then the third thing we can do is be somewhat objective because we're not in the middle of the crisis."
Carney made clear that the crisis could damage the global economy, including Canada's, but not to the extent that the Lehman Brothers collapse did in 2008.
The sudden and largely unforeseen collapse of the Wall Street investment bank was a symptom of, and a symbol of, the financial system's precarious condition due to a collapse of the U.S. housing and mortgage markets.
The collapse or near collapse of Lehman and several other major U.S. financial businesses resulted in a dire shortage of available credit used by businesses and consumers to make purchases and investments.
Carney's comments — made Thursday, before he and Finance Minister Jim Flaherty set off for the G20 meetings in France — appear to be part of a co-ordinated effort by like-minded countries to keep pressure on European leaders.
Snippets of the interview, which will be aired Saturday afternoon, were broadcast on CBC's television news channel throughout Friday.
Also on Thursday, Flaherty called on European leaders to show leadership, saying the continent has the financial means to "overwhelm the problem." Completing the trifecta, Prime Minister Stephen Harper warned in a newspaper op-ed article the Europeans they risk plunging the world into a new recession.
American officials have also been blunt about European half-measures, as has British Prime Minister David Cameron.
The criticism from North America, and Britain, appears to have ruffled feathers with German Chancellor Angela Merkel, who is seen as both the impediment and needed catalyst to a solution in Europe.
Merkel blasted critics Friday for insisting on bolder action from the eurozone while refusing to consider a transaction tax on financial institutions.
"It can't be that those outside the eurozone, who have pressed us time and again to take comprehensive action on the debt crisis, are at the same time working together to resist the introduction of a financial transaction tax," she said. "I don't think this is acceptable. We must ensure that financial market actors share in the costs of fighting the crisis."
On Thursday, Flaherty said a transaction tax "makes no sense in economic terms" because it would take capital out of banks at a time when the Basel III banking reforms are requiring them to increase capital reserves.
"(Last year) we led a coalition of countries that opposed it and were successful and we intend to follow the same path again," Flaherty said.
The divisions and apparent frustration among leaders suggests a solution to the European debt problem is not a foregone conclusion, despite hopeful signals in recent days that have quieted markets.
In his interview, Carney said he believes Europe has at best a couple of weeks to outline the measures needed to both avert a Greek default and build a firewall around the eurozone's affected banks to prevent contagion from spreading.
Carney said the current 440-billion euro emergency fund is woefully inadequate and said a facility of one trillion euros, and likely more, will be required.
Speaking on the same issue, British PM Cameron did not give an dollar figure, but called for a "big bazooka" approach.
The remarks coming out of Ottawa, Washington and London in the last couple of days suggests the three governments are in lock-step about the way forward, and that they intend to present a united front to Merkel and other eurozone members.
Carney did not go so far as to warn of a global recession if Europe fails to avert a sovereign debt and financial crisis, but said Europe would be sent into the ditch and the American and Canadian economies would also suffer.
"We're not talking about Lehman moments a la 2008," he said of the Wall Street investment bank collapse that froze credit and plunged the advanced world into the worst recession in 60 years.
"In Canada we have very few direct ties with Europe, but surely our financial markets, our financial institutions would be indirectly affected," he said.
"A severe outcome in Europe could substantial slow (U.S. growth), and then have a knock-on effect on Canada. We're aware of that, and that's why we're taking steps."
Carney said he is encouraged that European leaders are no longer "in denial" about the seriousness of the problem, and are saying the right things about tackling the problem.
"The words are right, they're working on the right things, we have to see the actions," he said.
In other matters, Carney said he is interested in taking charge of the Swiss-based Financial Stability Board, which will police new global banking regulations, when the position comes open later this fall.
Carney, who has become a vocal advocate for the Basel III reforms, said it would make sense for a Canadian to get the nod given than Canada is one of the few big economies that had a regulated and stable banking sector during the 2008-09 crisis.
"There are many people who think a Canadian would be suitable for the role," he said. "If I'm asked to do it I would serve." He made clear the post would be an add-on to his duties at the Bank of Canada.