Saturday April 18, 2009, Vancouver BC, to the American Bar Association 2009 Spring Meeting — The title of this session is global market turmoil and the Canadian regulatory response, but before discussing what the Office of the Superintendent of Financial Institutions (OSFI) has done through the turmoil, I believe a word about where we are in the cycle is important.
Before I talk about the OSFI response to the turmoil, let me touch briefly on some international developments. The situation in the global financial sector calls for some bold new initiatives – initiatives that have been set out by the G-20, the Basel Committee and the Financial Stability Forum (FSF). These are important discussions, in which Canada has played a central part.
This demonstrates that while we strike out into bold new directions, we cannot lose sight of some of the more fundamental elements that are critical to effective regulation. Mastering the fundamentals is an ongoing process, and if you do not get them right, there is a large risk that your effectiveness as a regulator will continue to be a challenge.
In conclusion, I have talked about some factors that are as important as developing new rules to deal with the problems we have seen in financial markets. These areas remain quite important to ensuring that we have an effective supervisory and regulatory regime in Canada. To summarize:
- A regulator needs have a clear mandate, and independence. The more focused the mandate, the better, as this helps a regulator stay the course.
- A regulator needs to concentrate on how to be effective, and a lot of this is embodied in the way it goes about its business and how it relates to the industry it regulates.
- A regulator needs to worry about his/her own back yard and cannot delegate accountability to international committees, or anyone else.
- A regulator needs to be able to speak about risk in plain language.
Finally I am also very aware that humans learn far more from failure than success, which in itself presents a risk to the Canadian financial system, as we have had fewer problems in recent years. We cannot, and will not, be complacent. We cannot ignore the very real lessons that are being learned elsewhere.
For the complete text
OSFI is an independent agency of the Government of Canada. It reports to the Minister of Finance. For more information visit www.osfi-bsif.gc.ca.