Canada’s banks welcome federal government move to level international playing field with interbank loan insurance
For Immediate Release
October 23, 2008
Toronto, ON – The Canadian Bankers Association welcomed the announcement today that the federal government will create the Canadian Lenders Assurance Facility to provide temporary loan insurance for inter-bank borrowing by Canadian banks.
“Canada’s banks are well capitalized and financially sound with or without this federal government loan insurance,” said Nancy Hughes Anthony, president and CEO of the Canadian Bankers Association. “Governments around the world have guaranteed loans between banks and our federal government has recognized that, without a similar move in Canada, our strong banks could find it more difficult to compete for loans on the international market, which ultimately could affect borrowing for consumers and businesses.”
Canada’s banks are well managed and well regulated and have largely avoided the financial problems that have impacted some banks in other countries. Canadian banks have been prudent lenders, avoiding the sub-prime mortgage loans that were popular in the United States, and were also the first in the world to adopt the advanced approaches to risk management under the new international Basel II capital framework.
“Our banks stand head and shoulders above the rest in terms of responsible lending practices and prudent management and this has allowed them to weather this storm better than most,” said Ms. Hughes Anthony. “But the difficulties in global credit markets are the result of problems that originated outside of Canada. We are not immune to the impacts of that turbulence, although Canada’s banks are in a far better position to deal with these new realities than others have been.”
A recent World Economic Forum report found that Canada’s banking system is the most sound in the world.1 The International Monetary Fund also found that: “The Canadian financial sector is among the world’s most highly developed. The institutions, markets, infrastructure, safety nets, and oversight arrangements that comprise the system are sophisticated.”2
The Canadian Bankers Association works on behalf of 51 domestic chartered banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 257,000 employees to advocate for efficient and effective public policies governing banks and to promote an understanding of the banking industry and its importance to Canadians and the Canadian economy.
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For more information:
Andrew Addison, Canadian Bankers Association
Tel: (416) 362-6093, ext. 220
Cell: (416) 587-7733
E-mail: aaddison@cba.ca
1 World Economic Forum, “Global Competitiveness Report 2008-2009”, October 2, 2008, page 456.
2 International Monetary Fund, “Canada: Financial System Stability Assessment – Update”, February 2008, page 6.
