Flaherty called the G7 meeting "historic" and supported a proposal to review the global financial system. He said the G7 meeting was the most frank and direct discussion he's seen, calling the five-point, joint-action plan "a clear plan of action."

Carney said he supports the G7 action plan, which he expects to be implemented rapidly.

The BOC will attempt to maintain its inflation target of 2%, he said, despite taking part in the co-ordinated global rate cut last Wednesday. He said the BOC has already provided a lot of liquidity but it will "provide more" if necessary.

The joint statement from the Group of Seven finance ministers agreed that the current situation "calls for urgent and exceptional action." The five directives are aimed at stabilizing financial markets and restoring the flow of credit to support economic growth. The ministers vowed to use "all available tools" to help banks gain access to liquidity.

On Friday morning, Flaherty announced the Canadian government would buy up to $25 billion in insured mortgage pools in an effort to maintain the availability of longer-term credit.

Later on Friday, Flaherty said he was satisfied with the steps taken by the Canadian government so far, and doesn't foresee the need to implement new measures.

"This action will help Canadian institutions raise longer-term funds and make this credit available to consumers, home buyers and businesses in Canada," he said.

The ongoing global financial crisis is making it increasingly difficult for Canadian banks to raise long-term funding, and that is beginning to affect the availability of mortgage loans and other types of credit, Flaherty explained. While he insisted Canadian banks are sound and in no danger of failing, he said the government wants to act proactively to head off any problems in the future.

"This is going to make loans and mortgages more available and more affordable for ordinary Canadians and businesses," Flaherty said.

Sherry Cooper, global economics strategist at BMO, commented that the underlying fundamentals of Canada's economy are strong and the nation's banks are the soundest in the world. However, she noted the "global financial pandemic could well be prolonged and will certainly have lasting longer-term effects."

By Patrick McGee, This email address is being protected from spam bots, you need Javascript enabled to view it , with contributions by Sean McKibbon, This email address is being protected from spam bots, you need Javascript enabled to view it ,

CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.