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g7 summit

Canada's Finance Minister Jim Flaherty speaks to reporters during a news conference in Iqaluit, Nunavut, on Feb. 5, 2010, as G7 Finance Ministers assemble in the northern community for a meeting.GEOFF ROBINS/AFP / Getty Images

The finance ministers of the G7 have given themselves less than 24 hours between wheels down and wheels up on this barren subarctic island to sort out their differences over the best way to prevent another global financial collapse.

Markets on Friday reminded them of the urgency of their work as concern over the finances of Greece and Portugal made for a very unstable day of trading.

The task of finding a common solution appears nearly impossible. Various G7 members are on opposite sides of key issues, such as whether to tax bank bonuses or create a massive emergency fund to use in the event of another crisis.

Finance Minster Jim Flaherty has already waded into this public debate, dismissing all proposals that call for new forms of taxation. He proposes Canada's banking system as the model for others.

In his opening news conference with Canadian and international media, Mr. Flaherty acknowledged these G7 divisions, which have played out through public comments in recent months. But he expressed hope that the new, informal tone he is setting for this year's gathering will help smooth those divisions in moving toward a more consistent approach.

"Several countries have made banking-sector proposals that are not entirely consistent. So it's a good reason to gather. It's a good reason to talk about it. And it's a good reason to gather in an informal setting so we can have frank discussions," he told reporters.

Mr. Flaherty, wearing a bulky black parka with a hood lined with coyote fur, spoke in front of a lit fireplace in the town's main hotel nightspot. A white polar-bear hide was mounted on the wall behind him, next to a white wolf hide. Above him, caribou-antler chandeliers added to the image of the informal retreat setting that Mr. Flaherty has advocated.

The U.S. government recently suggested it would like several changes to banking rules, including new rules that would ban banks from using their own money to speculate on financial markets and to invest in hedge funds and private equity firms. That's far more aggressive than any other country in the G7. The British government intends to apply a one-time tax to bankers' bonuses, a plan the French may follow.

The six other finance ministers are not scheduled to hold open news conferences until early Saturday afternoon, when the summit ends.

Alistair Darling, the British Chancellor of the Exchequer, told The Globe and Mail in an interview this week that not every issue needs to be resolved this weekend, but some key decisions need to be made now.

He maintained that view yesterday in an interview with the Business News Network.

"The risk is that in 2010, people think, 'Okay, we're coming through this, maybe we can put this off.' I don't think we've got that luxury," he said.

Beyond banking reform, Mr. Flaherty said all G7 countries do agree on the need to continue with existing stimulus plans. On this issue, the focus of discussions will be over striking the right balance on fiscal policy. Canada and all other G7 nations are debating how best to make the switch from stimulus spending to fighting deficits and debt.

He also said the G7 is making progress toward a plan to forgive debt owed by Haiti in light of last month's earthquake. U.S. Treasury Secretary Timothy Geithner issued a statement supporting the idea, calling for a "massive multilateral effort" to help Haiti.

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