Canada's Finance Minister Jim Flaherty announced Friday the government will buy mortgage debt worth 25 billion Canadian dollars (21.5 billion U.S. dollars) from Canadian banks in a bid to stabilize the lending industry and encourage banks to lower interest rates.
Flaherty made the announcement Friday before heading to Washington to meet with other G-7 finance ministers to formulate a plan for dealing with the current economic turbulence.
That will ease pressure on banks and other lenders, and prompt banks to lower their lending rates for Canadians, sparking renewed buying activity, according to Flaherty.
He said the plan is an "efficient, cost-effective and safe way to support lending in Canada that comes at no fiscal cost to taxpayers."
Flaherty maintained the position of the Conservative government that the economy is still strong and well protected from U.S.-style economic turbulence resulting from the sub-prime mortgage crunch.
He said Canadian banks and financial institutions are "sound and well-capitalized, and less-leveraged than their international peers."
Prime Minister Stephen Harper has also sought to reassure Canadians that the economy is stronger than its U.S. counterpart, and will weather the economic storm.
Over a year ago, Harper warned the economy was headed for a slowdown and Canadians shouldn't expect major spending from the government.
The opposition has accused Harper of taking a "do nothing" approach, but he maintains his government has been quietly preparing for the slowdown and shouldn't take drastic reactionary steps now.
Source: Xinhua
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