SAINT JOHN, N.B. - Canadian central banker Mark Carney is issuing a call to action to governments in advance of pivotal meetings this week, and laying partial blame on their ineffectual responses so far for taking the world to the precipice of a new recession.

In a hard-hitting speech to a business crown in Saint John, N.B., Carney said Tuesday the combination of sovereign debt worries and bad politics have sapped investor confidence.

"The debt-ceiling fiasco in the United States and the inability, to date, of European policy-makers to get ahead of their crisis have reduced investor confidence in the effectiveness of policy," he said.

"The combination of high debt loads and unpredictable politics is toxic."

A text of the speech was pre-released in Ottawa.

The no-nonsense language, unusual for a central banker, highlights the importance Carney gives to the upcoming meetings of the G20 finance ministers and International Monetary Fund later this week. But it also underscores the gravity of the situation as Carney perceives.

Europe's fiscal and debt problems are serious but fixable, but governments must act swiftly to fix them, he said.

And he said the U.S. is not doomed to suffer another recession, but the risks have clearly risen and squabbling politicians in Washington are only making matters worse.

While these problems -- and solutions -- lie mostly outside Canada's borders, Carney said that the Canadian economy will not skirt by another shock unscathed. In fact, the economy is already being damaged through a tightening of financial conditions and a slowdown in growth, particularly in the export sector.

"The risks to our economy remain largely external and are skewed to the downside," he said, foretelling a growth projection downgrade from the bank at its next policy meeting in October.

Earlier in the day, the IMF cut Canada's projected growth for this year to 2.1 per cent and 1.9 per cent in 2012, while also downgrading economic expectations for much of Europe and the U.S.

Carney says the world can, however, avert another economic shock if policy-makers act.

The most immediate concern is funding pressures building on European banks that hold billions of dollars in suspect sovereign debt.

"If not quickly reversed, this situation could create a damaging negative feedback loop among banks, lending and the real economy," he said, much as occurred in 2008.

The U.S., meanwhile, is in the midst of the weakest recovery since the Great Depression, taking it to the edge of another recession.

"The U.S. economy is close to stall speed, where a negative feedback loop between weak employment, consumer demand, and business hiring and investment could emerge," he warned. This could happen if markets plunge further, further slicing household wealth and confidence.

Carney urged European leaders to capitalize their banks, and also offer "a sizable funding backstop" for indebted European governments. This would give them time to restructure their eurozone.

Generally, he said world leaders must move to implement reforms they had already agreed to, including financial reform, rebalancing demand between export and import economies, and restructuring currencies to reflect their true market value.

If a new shock occurs, however, Carney said the Bank of Canada is ready and has the tools to help boost the Canadian economy. For instance, Carney suggests that he could keep interest rates lower for a longer period than normal circumstances would warrant to ensure lending markets remain active in Canada.

"Canadians can ... be assured that the bank will take the necessary steps to ensure that core financial markets remain liquid and operating," he said.