BoC's Carney says global recovery not established

Sat Sep 5, 2009 1:04pm EDT
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By Louise Egan

LONDON (Reuters) - Bank of Canada Governor Mark Carney said on Saturday that Canada would implement new bank capital rules endorsed by the G20 and that the country was making good headway in implementing tougher international standards aimed at preventing a repeat of the financial crisis.

Canada's banks have been famously well capitalized and stable through the crisis due to stricter regulations and a conservative banking culture.

But both Carney and Finance Minister Jim Flaherty pledged to do more domestically as part of a concerted G20 effort to fix flawed capital rules and risk management practices by banks.

"There are going to be changes to bank capital regulations. Those are being developed internationally," Carney said at a news conference following the G20 meeting of finance ministers and central bankers.

"When they're agreed, they will be applied in Canada and we are leading in those discussions and there's a host of other things that can be done to extend our advantage in financial stability and financial markets."

It is not clear yet whether the central bank will take the lead in the new regulatory drive domestically. Carney has in the past suggested the central bank could take on a greater role in so-called macroprudential regulation but on Saturday he acknowledged that most of the international rules fell under the jurisdiction of the finance minister.

"Canada is making very good progress on implementing all the G20 recommendations ... Obviously the bulk of the recommendations are under the direct responsibility of the minister of finance, the department of finance," he said.

Carney also said the global economic recovery is not yet fully established. He said policy makers will monitor leading indicators on business and consumer confidence, employment, investment indicators and disposable income to judge when the recovery is ensured.   Continued...

<p>Bank of Canada Governor Mark Carney speaks during a news conference after the release of the Monetary Policy Report in Ottawa July 23, 2009. REUTERS/Blair Gable/Files</p>