Edited by John Raymond LaBrosse, Rodrigo Olivares-Caminal and Dalvinder Singh
Chapter 22: An Evaluation of the Canadian Financial Safety Net During the Global Financial Crisis
1 John Raymond LaBrosse and James F. McCollum 22.1. INTRODUCTION The Canadian financial sector came under some pressures during the financial crisis, but these were relatively moderate and largely imported. The Canadian banks were remarkably resilient, particularly compared to those of other major advanced countries, such as the US and the UK, and there were no institutional failures or bailouts. This performance has led some observers to suggest that Canadian public policy in this area – the characteristics of the financial safety net, including regulation, supervision and coordinating mechanisms – may provide a model for other countries. The chapter starts with an overview of the entities that make up the financial system safety net and then describe, in Section 22.3, the coordinating mechanisms. In Section 22.4, we focus on the Canadian mortgage market and then consider the Canadian situation during the recent global financial crisis in Section 22.5. The resiliency of the Canadian system is examined in Section 22.6. In the penultimate section we propose some ways to address two important gaps in the financial safety net – a means to integrate the prospective national securities regulator into the safety net and a policy to locate responsibility for overall financial system stability within the safety net. The final section offers some conclusions. 22.2. THE PLAYERS 22.2.1. The Minister and Department of Finance Through the Minister, the Department of Finance is the central agency that has ultimate responsibility for the overall soundness of the financial 416 LABROSSE PRINT (M2637).indd 416 26/05/2011 16:35...
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