The federal government is assembling a working group to ensure Canadians have sufficient access to credit, federal Finance Minister Jim Flaherty said on Tuesday.

Flaherty said the decision was made in a meeting with the chief executive officers of Canadian banks on Monday.

“We do have some gaps in credit,” Flaherty said. “We agreed on forming a working group to work on ensuring adequate availability of credit, of financing in Canada. And that group will meet immediately.”

The Canadian Bankers Association agrees that the credit market has tightened, but argues that banks are not the ones scaling back lending.

“It’s among some non-bank sources of financing that we are seeing some pull-back in making credit available,” said Nancy Hughes Anthony, president and CEO of the association, in a statement. “Banks are trying to fill this gap, but we’re not able to take up all the slack from other providers.”

In the meeting with the finance minister, the Canadian Bankers Association assured Flaherty that banks were continuing to lend to credit-worthy individuals, but also emphasized the importance of maintaining prudent lending standards during the economic downturn.

“Banks in Canada have been prudent lenders and, because of this, largely avoided the financial difficulties and sub-prime mortgage issues that have plagued banks in other countries,” said Hughes Anthony.

She added that in the current period of economic uncertainty, demand for credit is likely to decrease.

Yet in conducting consultations for the 2009 budget, Flaherty said that access to credit has been the top issue he’s heard about from Canadians. He said the problem is having a significant impact on both large and small businesses, as well as individuals in terms of mortgages and car loans.

Measures related to credit access are likely to be included in the federal budget later this month, Flaherty said.

“We all have responsibilities to ensure that the financial system functions properly in support of the Canadian economy and certainly the government has a role to play in that,” Flaherty said.

He added that the government was assessing the commercial paper market and exploring relevant ways of ensuring it functions effectively.

“There are a number of policy options there,” Flaherty said.

IE