An outspoken critic of eurozone leaders for not acting quicker to contain the debt crisis, Flaherty stepped up the pressure again just days ahead of a meeting of finance ministers from the Group of Seven major developed economies on 11 October.
"The overriding concern at the meetings? Europe is number one, it has to be number one, because it is the clear and present danger and it remains that," he told reporters on Wednesday (3 October).
"Things have not gotten better in Europe, because of the lack of action," he added.
"There have been a couple of steps taken by the European Central Bank, by Mario Draghi, which are helpful and go in the right direction. But the fact that we still have under-capitalised banks in Europe and that we have issues with respect to sovereign indebtedness that persist - those facts haven't changed."
The G7 meeting will take place on the sidelines of annual International Monetary Fund and World Bank gatherings in Tokyo next week.
Canada and the EU are also in the midst of negotiating an economic and trade agreement. The EU is Canada's second largest trading partner, after the United States.
Canada's Conservative government, billing itself at home as fiscally cautious, is resisting pressure from other countries to contribute extra money to the IMF so that it can help Europe, Flaherty said.
"We will maintain our position. These are wealthy countries in the European Union and they can finance their own resolution of the issue," he said.
Europe is set to tell the G7 that the US fiscal troubles also pose risks to the global economy, but Flaherty was less gloomy about the American economy.
He believes most members of the US Congress understand the urgency of avoiding the "fiscal cliff", which refers to the combination of spending cuts set to take effect on 2 January and tax increases that could seriously dent US growth.
"This must be dealt with because if it's not dealt with, then the effect on US GDP will be very significant, and that of course directly affects Canada," he said.