With economists across the globe predicting the next big financial crisis to hit the global economy soon enough, there are quite a few shortcomings in the Canadian economy that need to be addressed.
According to the International Monetary Fund (IMF) review of Canada’s financial system in 2014, it was suggested that Canada improve the capital market systemic risk management and the coordination between the federal and provincial governments over systematic risk oversight.
Since then, the federal and provincial governments have bolstered the Capital Markets Regulatory Authority with the proposed Capital Markets Stability Act, which will be implemented nationally.
While we await the nation-wide implementation of the Capital Markets Stability Act, the debate over its lack of transparency and clarity is an entirely different story.
In addition to that, a few years ago, the Bank of Canada elucidated that institutions like the B.C. Credit Union Central and Desjardins will receive assistance for emergency liquidity only if certain conditions are met.
These financial institutions are systemically important for the Canadian financial system and yet, they need to have prior arrangements in place with their respective provinces for loss coverage to obtain any assistance from the Bank of Canada, even in crisis situations, as for the provinces, each has a different outlook on the matter.
While Quebec has taken a proactive approach to upgrade its system regulation and supervision, Alberta and British Columbia have been considerably laid back on the issue.
Quebec posted a surplus of $4.5 billion this year thanks to $10 billion transfer payments from the oil industry of Alberta and Saskatchewan, the economy in the province continues to grow rapidly.
A complete overhaul of the financial system is a daunting task. On provincial levels however, it isn’t as expensive and overwhelming as it seems.
In truth, a review of the regulatory framework, identification of potential problems in it, and relevant upgrades to eliminate those can save Canada from the prospective devastation of an international financial crisis.
The Montreal Mayor, Denis Coderre was one of the only politicians celebrating the cancellation of the Energy East Pipeline which would have boosted Canada’s economy by $50 billion.
Quebec so far is more prepared for a financial crisis than the rest of Canada.
Meagan Kozlovs is a reporter for Debate Report. She’s worked and interned at Global News Toronto and CHECX. Megan is based in Toronto and covers issues affecting her city. In addition to her severe milk shake addiction, she’s a Netflix enthusiast, a red wine drinker, and a voracious reader.