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The Bank of Canada is warning that conditions in the global financial system have “deteriorated significantly” since the summer because of the worsening European debt crisis and weaker world-wide economic outlook.

Despite the relative health of the domestic banking system, the rise in negative pressures worldwide will likely have a “considerable impact” in this country, the central bank said in the latest edition of its biannual Financial System Review.

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In its starkest warning since the beginning of the turmoil, it said stability of the Canadian banking system faces a “very high risk” from the turmoil in Europe, which it deems by far the most serious threat.

The comments come the same day as leaders of European countries are set to gather to hammer out a deal on revisions to the eurozone treaty aimed at avoiding a potential collapse of the currency region.

However much of the optimism that the 27 countries would be able to agree to a solution has evaporated over the last few days amid widening division. Fractious issues range from the flexibility that European Central Bank might exercise in supporting troubled countries to Britain’s demand that nothing be done to harm London’s role as a financial centre. In a sign of just how divisive the situation has become, policymakers are even arguing over how many countries need to sign the deal.