Canada's Carney says more work needed to rebuild trust in banks
By Russ Blinch
LONDON, Ontario (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.
The lack of trust in major banking systems "deepened the cost of the crisis and is restraining the pace of recovery," Carney said in the speech.
"There is a growing suspicion of the benefits of financial deregulation and cross-border financial liberalization, a suspicion that could ultimately undermine support for free trade and open markets more generally," he said.
Carney said progress in the G20's financial reforms was "not yet fully reflected in market valuations or public attitudes," lamenting that the good work done so far had been overshadowed by a spate of scandals, including one involving the rigging of Libor interest rates.
In a question-and-answer session, Carney said he expected to make major progress this year on banks deemed too big to fail. Continued...