April 22, 2010, Toronto – Canada has received a lot of international attention recently, in part due to the strong performance of our financial sector through the global economic crisis. As the world at large began to notice that Canada seemed to be avoiding some of the stresses being experienced in other countries, OSFI, as the federal regulator and supervisor of Canada’s financial institutions, began receiving a lot of enquiries from international news media, and the requests to speak at international financial conferences have more than quadrupled.
All this is well and good, but I am appreciative of the chance to explain today that while accolades are nice, they tend to create additional risk, and managing risk is what banking supervision is about.
What are the additional risks that all these accolades for the Canadian system might create?
- There is a risk that the public will become confused about what OSFI’s job is, and to think that our job is to prevent all failures – it is not.
- There is a risk that OSFI could become complacent and think the current rules and way we supervise are sufficient. This is not necessarily the case. Another risk is that OSFI could become too focussed on risk.
- There is a risk that institutions will assume that capital and liquidity rules will not change much, because Canadian rules were robust going into the crisis. While this view is somewhat understandable, it is not guaranteed.
These risks must be ever present in our minds.
To read the full remarks, go here
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.