Flaherty (LLB ’73) named world’s top finance chief by Euromoney
published November 1, 2009
Mr. Flaherty, riding on Canada’s ability to weather the worst of the financial crisis, is making a name for himself in the world of international finance.
Counterparts from the United States, Britain, China and elsewhere seek him out for advice on overhauling financial regulation. Last week, in a prelude to meetings of the International Monetary Fund and World Bank, Mr. Flaherty joined Bank of Israel’s Stanley Fischer, a former Citigroup executive and one of the most respected figures in international economics, at seminar discussing fiscal policy in front of a packed room of international policy makers, economists and other officials.
“I’ve seen him evolve as this crisis developed,” Bank of Nova Scotia chief executive officer Rick Waugh said Monday at a luncheon where he had invited Mr. Flaherty to speak. Mr. Flaherty and his team have “shown leadership. They’ve shown direction,” Mr. Waugh said.
Euromoney, a glossy, 40-year-old publication devoted to international financial markets, presented Mr. Flaherty with its award at a noon-hour reception. Past winners include former U.S. Treasury Secretary Robert Rubin and Manmohan Singh, who is currently India’s prime minister.
The magazine also honoured Turkey’s Durmus Yilmaz as its top central banker at the cocktail reception.
Many Canadian investors will no doubt remember their losses when the finance minister ended the tax benefits of income trusts, and his political opponents in the Liberal party may argue that any reputation he is building benefits from the hard work done by Paul Martin, who is credited with ending a generation of budget deficits.
In an article on Mr. Flarhety, Euromoney characterized his income trust decision as courageous and praised his tenacity on making serious headway on bringing about a single Canadian securities regulator.
“You have to admire minister Flaherty’s tenacity,” the magazine quotes Toronto-Dominion Bank chief economist and former senior Finance official Don Drummond as saying. “He hits a brick wall, and he comes back at it time and again to get things done. Others, including myself, gave up on a national securities and exchange commission, thinking it was hopeless. But he just keeps on kicking.”
Euromoney also credited Mr. Flaherty for acting quickly and spending big when it became clear Canada was headed for recession, and – like almost everyone else – lauded Canada’s financial regulation.
In accepting his award, Mr. Flaherty talked mostly about the lessons of the last year.
He recalled that a year ago this Friday, he and his counterparts among the Group of Seven finance ministers and central bankers were at a meeting in Washington, facing the very prospect of markets not opening on the following Monday.
The G7 finance chiefs ripped up the communiqué their officials has prepared for them and rewrote a more direct statement that was meant to send a message to financial markets that the world’s major governments were set to stop the carnage.
What followed was the first-ever meeting of the leaders of the Group of 20 developed nations and emerging markets, which committed to spend 2 per cent of gross domestic product fighting the crisis. Last month in Pittsburgh, amid signs their efforts had arrested the recession, the G20 took over from the G7 as the world’s premier forum for discussing global economic policy.
“The biggest lesson of the last year is how much we can do together,” Mr. Flaherty. “There’s a great sense of co-operation that quite frankly wasn’t as strong one year ago.”
As for advice, Mr. Flaherty, the unabashed fiscal conservative, told the couple of dozen officials present that the one of the most important things a government can do is to keep spending under control and pay down debt.
While he might have given a nod to Mr. Martin, too, Mr. Flaherty said the smartest thing he had done as finance minister was to make substantial debt payments after he took over the job in 2006. That’s making the more than $50-billion deficit he’ll run this fiscal year easier to stomach. Mr. Flaherty said one of the reasons for the debt payments was to be ready for the downturn that he said he knew would eventually come.
“It’s a good lesson for all of us to be prepared for the next time,” Mr. Flaherty said.