UPDATE 2-Canada's Carney says more work needed to rebuild trust in banks

Mon Feb 25, 2013 4:06pm EST
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* Carney says lack of trust in bank system slows recovery

* G20 has made progress; but bankers must build core values

* Progress overshadowed by Libor, other banking scandals

* Carney sees 2013 progress on "too-big-to-fail" banks

By Russ Blinch

LONDON, Ontario, Feb 25 (Reuters) - Banks and regulators must do much more to rebuild the trust in the financial system that was shattered in the recent crisis, Bank of Canada Governor Mark Carney, head of the G20's Financial Stability Board, said on Monday.

The Group of 20 leading economies has made progress on financial reforms and that will go a long way, but these alone will not be sufficient, Carney said in a speech to business students at the University of Western Ontario in London, Ontario.

"Virtue cannot be regulated. Even the strongest supervision cannot guarantee good conduct. Essential will be the rediscovery of core values, and ultimately this is a question of individual responsibility," he said.

Carney's comments on regulation are being closely watched by British bankers. He will leave Ottawa to become governor of the Bank of England in July, taking over as the UK's central bank expands its oversight of the financial industry.   Continued...