With the Toronto stock market taking its biggest one-day plunge in years, Finance Minister Jim Flaherty acknowledged Thursday's turmoil and said his department was closely monitoring the situation.

"Canada is not immune to fluctuations in global financial markets," he said in a statement on the Department of Finance website. "Clearly, there are stresses in some corners of the Canadian money markets."

Finance Minister Jim Flaherty, seen speaking at the TSX in July, says he is in contact with Bank of Canada Governor David Dodge.
(Aaron Harris/Canadian Press)

Flaherty said he was "in close contact with Bank of Canada Governor [David] Dodge and market participants."

The central bank has intervened several times in the past week, injecting more than $4 billion into the financial system to boost liquidity.

Flaherty welcomed Thursday's agreement by major financial players to resolve the credit crisis that had made it difficult for some issuers of commercial paper to refinance their debt.

He also moved to reassure investors by saying Canada's economy is the strongest it has ever been.

"We must be clear that the fundamentals in our economy are very strong — that includes corporate balance sheets and household savings — and that our financial system remains very well capitalized," he said.