Flaherty eager to adopt global banking reform agenda

Wed Apr 16, 2008 4:59pm EDT
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By Louise Egan

OTTAWA (Reuters) - Canada needs to jump on the global bandwagon in favour of tougher banking regulations, even though domestic institutions have kept their footing throughout the credit crisis, officials said on Wednesday.

Finance Minister Jim Flaherty plans to meet with top banking executives next week to urge them to adopt reforms endorsed by the G7, aimed at soothing the battered global credit market.

"We agreed in the G7 that we would move ahead with the Financial Stability Forum reforms and I want Canada to be on that page," Flaherty told reporters.

The Bank of Canada welcomed new regulations announced on Wednesday by the world's top banking watchdog, the Basel Committee on Banking Supervision, saying they were relevant to Canada.

Policy-makers from the world's seven most industrialized countries pledged over the weekend to implement a list of recommendations for ridding the international financial system of the flaws that led to the crisis.

The proposals were offered in a report by the Financial Stability Forum, which comprises central bankers and global regulators.

Within 100 days, they agreed to tell banks to reveal the extent of their losses and exposure to toxic assets like U.S. subprime mortgage-backed securities, using a template for valuing those assets that is included in the report.

When asked what his message to domestic banks would be, Flaherty said, "The importance of going ahead and using the leading practices that are prescribed now by the Financial Stability Forum. Our banks are pretty good in accomplishing that already, but we need to have uniformity."   Continued...