DAVOS, Switzerland — The next economic collapse could be even worse if the international community fails to fix its broken financial system, Prime Minister Stephen Harper warned during a major speech to some of the world’s most powerful economic minds.
“In that role, the G20 will stand or fall on its ability to demonstrate, in the months to come, the same co-operative spirit it has shown over the past year,” Harper said. “In fact, if inadequate regulation is not addressed, I believe the consequences could actually be worse than before this crisis.”
Speaking at the World Economic Forum Thursday, Harper told heads of state, NGOs and CEOs from some of the world’s most powerful corporations that the G20 cannot allow banks to return to old habits.
“If after a period of renewed stability, institutions are able to return to the irresponsible practices that caused the crisis, they would have learned a very bad lesson,” he said. “That reckless behaviour can be engaged in because national governments will ultimately backstop the consequences.”
Harper also sent a message to his G20 partners that he is not prepared to endorse a massive expansion of regulations that would constrict or punish banks.
“To be clear, through the G20 we will be encouraging strengthened financial sector regulation and improved co-ordination between regulators,” Harper said. “But Canada will not go down the path of excessive, arbitrary or punitive regulation of its financial sector.”
He praised the work of the G20 in providing stimulus to their flailing economies, but said it was time to start thinking about how to get out of the stimulus business.
Harper also issued a stern warning against the perils of protectionism and trade barriers that have reared their head since the onset of the global economic downturn.
“Notions rooted in a narrow view of sovereignty and national self-interest must be reconsidered,” Harper said. “We cannot do business as though, for one to have more, another must have less. It is not true. It is not just.”
peter.zimonjic@sunmedia.ca
