Canada’s financial system a model for the world
Canada’s financial system is vital to the economy, which affects all Canadians and their quality of life. Luckily, Canada has a strong financial system in place with healthy banks. In fact, the World Economic Forum has ranked Canada’s banking system as the most sound in the world for five years in a row, according to the Canadian Bankers Association.
One obvious example in recent history that shows the resilience of Canada’s financial systems include avoiding having to bail out its major banks, as the U.S. did thanks to its subprime mortgage crisis that triggered a recession in 2008. We all know what happened; but in short, it led to foreclosures of homes and the collapse of some major U.S. financial institutions.
Canada was definitely not immune to it, but it managed to weather the storm quite well through the recession. A good portion of the Eurozone is still in recovery mode (analysts blame lack of lending from banks), although Germany was reported to have made a full recovery.
How did Canada get through relatively unharmed? Well, depends what you read. Some pundits suggest it was luck. But the truth is, as mentioned in the same link, is that Canada was in better financial shape than others when it entered the 2008 recession.
It also comes down to the more strict rules and regulations Canada has when it comes to lending (including limiting sub-prime mortgages), a relatively low national debt, and low and targeted inflation. Read more about it here.
In short, Canada’s financial system can continue to set an example for other countries into the future. But let’s hope it doesn’t have to be tested against any major recessions anytime soon.