Canada's Carney urges system-wide view on reform

Mon Mar 30, 2009 4:08pm EDT
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By Scott Haggett

EDMONTON (Reuters) - The G20 meeting in London this week should take an approach to financial regulation reform that looks at the system as a whole and the interaction between banks and markets, Bank of Canada Governor Mark Carney said on Monday.

In a speech in Edmonton, Carney said global policymakers seeking to prevent financial crises should extend regulation to all financial activities that can pose a systemic risk.

"We are stressing the need for a macroprudential (i.e., comprehensive and system-wide) approach that takes into account the importance of banks, markets, and the interactions between them," Carney said.

"This will include pools of capital of material size, leverage and maturity mismatches," he said.

The speech disappointed markets looking for clues about the central bank's next monetary policy move, whether it be another interest rate cut or a foray into asset purchases.

Carney, who has another speech scheduled for Wednesday, sidestepped the subject entirely.

The bank has cut rates to a record low of 0.5 percent and has said it will lay out its options for "credit and quantitative easing" in a report on April 23, two days after its next rate decision.

The central bank governor also said he sees no change "for the foreseeable future" to the current system in which the U.S. dollar functions as the world's reserve currency.   Continued...

<p>Bank of Canada Govenor Mark Carney speaks at a news conference following the G20 Finance Ministers meeting at a hotel, near Horsham, in southern England March 14, 2009. REUTERS/Kevin Coombs (</p>