The Bank of Canada should collect and analyze data to assess the changing nature of the risk profile of Canada’s shadow banking sector, according to former Federal Finance Minister Michael Wilson. In “Taking the Shadow Banks out of the Shadows,” Wilson emphasizes that overregulation is not the answer to ensuring stability and competiveness in the sector.
Canada’s shadow banking sector is not as large as in other countries and the assets involved are subject to less credit risk, states Wilson. Creating a role for the Bank of Canada to improve data collection on a voluntary basis is an appropriate response to this growing part of the financial sector.
Wilson commented: “I believe that this would be a useful and responsible step forward to managing the shadow banking sector in Canada. It would help both the authorities and the banking sector in carrying out their responsibilities, and in so doing, it would contribute to taking shadow banking out of the shadows.”
For more information contact: Kyle Murphy at the C.D. Howe Institute on behalf of the Honourable Michael Wilson, Chairman, Barclays Capital; former Canadian Ambassador to the United States and Federal Finance Minister, 416-865-1904; E-mail: kmurphy@cdhowe.org.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada’s trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada’s most influential think tank.