Flaherty, who has been publicly critical in the past of the way Europe has handled the crisis, said Friday that the actions taken at a summit in Brussels are along the lines of what he's been advocating for three years.
In what some have called a breakthrough, eurozone leaders meeting in Brussels agreed to recapitalize banks directly instead of through national governments, which had placed additional debt on their books and worsened their already precarious fiscal situations.
The agreement was viewed as a victory for Spain and Italy, overriding the reluctance of German Chancellor Angela Merkel.
Stock markets in Europe and North America rallied on the news and yields on Spanish and Italian government bonds fell sharply.
"We have long called for action to be taken and we applaud Europe for taking these steps," Flaherty told reporters in a conference call from Galway, Ireland.
Now, the Canadian finance minister said, he is looking for quick implementation.
"I always worry about agreements reached in the middle of the night," he said.
"I want to see clearly what is being proposed with respect to the direct recapitalization of banks. If this is going to be a comprehensive program for the recapitalization of banks in the eurozone, that's very important and that is something we have been advocating for."
Flaherty cautioned that breakthroughs appeared to have happened in the past, only to disappoint markets once either the details became known or because governments backed away from following through.
But he said he was encouraged that this time European leaders mean it.
"I do think the G20 meeting (earlier in June) must have had some positive effects on the European leadership," he said.
"Some of this is still kicking the can down the road ... (with) another more comprehensive statement in October. (But) I'm actually encouraged by some sense of scheduling."
Still, he said that much work still needs to be done before Europe can be said to be out of the woods.