Strengths and weaknesses of Canadian financial regulation before and after the global financial crisis

The Canadian financial system came through the global financial crisis of 2007–2009 relatively unscathed. Important elements in this success were Canadian financial regulation and supervision. This case study argues that Canadian strengths in regulation and supervision before the crisis fell into four categories: capital regulation, a learning culture, the use of principles in addition to rules and the regulation of mortgage insurance. Nonetheless, the crisis in Canada and globally also pointed out some weaknesses in Canadian regulation, particularly in its neglect of certain types of systemic risk. Many of these weaknesses have been dealt with in terms of new macro-prudential regulations. However, some concerns remain in that area, as well as in securities regulation and competition policy.