Canada does not deserve over-regulation

摘要

Canadian banks performed well during the financial crisis and have continued to generate healthy profits in the first quarter of 2011. It is only understandable then that, like many other lenders in the world, they worry about the proposed stringent Basel III rules. Unlike many banks around the world, Canadian banks did not go into the red or have to be nationalised, so many complain about the risk of having their activities curtailed. Gord Nixon, chief executive of the Royal Bank of Canada, has strong views about international regulation that could go too far. His country's banking system has been working well with a principle-based approach and the need to tame systemic risk, necessary in other markets, is not mirrored in Canada. In the US, the collapse of structured products that were based on subprime residential mortgages - at the epicentre of the financial crisis - was a consequence of the lax regulation of the mortgage market, says Mr Nixon. This does not correspond to the Canadian market, where mortgages are highly regulated and excessive capital requirements - which can supplement permissive regulation in other non-banking sectorswould be meaningless.