In effort to combat an ongoing liquidity crisis, Canadian finance minister Jim Flaherty says that he will begin working with accredited financial institutions to ensure that adequate growth capital is provided to consumers and businesses.

Central banking efforts to reduce interest rates in the previous quarter had little effect on the effective interest rate provided by Canadian banks, as banks made the decision to withhold further capital and try to ensure stability within their own businesses.

Flaherty, eager to speak positively of his responsibilities, was quick to speak Monday on the topic of the “strength” of the Canadian banking establishment - suggesting that the banking industry in Canada be one of the strongest in the world; a fact rarely challenged by economists.

The minister went on in his speech to discuss the roles of the Bank of Canada, the government and charted banks themselves in the role of providing credit and liquidity in the capital market.

“We [have gaps in credit]. We agreed on forming a working group to work on ensuring adequate availability of credit, of financing in Canada. And that group will meet immediately,” spoke the Minister of a new focus group which will include members of the banking community, members of the Bank of Canada, and representative economists from the Canadian government.

Flaherty also spoke of a number of fiscal and budget policies which will be enacted in the next budget - overwhelmingly directed towards tax cuts, infrastructure projects and general economic stimulus. The budget, which is formally announced January 27th, is expected to be filled with stimulus projects.

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