The Bank of Canada should play a “clear leadership role” in efforts to safeguard the country’s financial system, but the final say over how regulators should address risks, such as record household debt, must be left with Finance Minister Jim Flaherty, according to a report.
The study, being released Wednesday by the C.D. Howe Institute, argues that, while Canada’s oversight framework has kept the system stable during three-plus years of turmoil, there are still ways it could improve. Chief among those, the report says, is by beefing up a committee of senior officials from various agencies that advises Mr. Flaherty and giving Bank of Canada Governor Mark Carney a senior role, while leaving ultimate authority in Mr. Flaherty’s hands.
C.D. Howe’s report, written by McGill University economist Christopher Ragan, is part of a continuing post-crisis push to achieve what officials call “macro-prudential” regulation, policies aimed at protecting the entire financial system, and keeping problems there from spreading to the wider economy.