Bank reforms are half-way done, FSB’s Carney says
Posted in Beavers by: admin
TORONTO, April 29 |
TORONTO, April 29 (Reuters) – Efforts to reform the world
financial system to prevent a crash like the one that helped
trigger the 2008 recession are half complete, and the challenge
now is not to lose the momentum, Bank of Canada Governor Mark
Carney said on Sunday.
In an interview with Canada’s Global TV, Carney, who also
heads the international Financial Stability Board set up to fix
financial systems, said it would take European countries months
or years to rebuild their economies and financial systems.
“We made a lot of progress in building capital in the banks
internationally, we made progress improving liquidity, we’re
making progress in making derivatives and other markets more
resilient and safer,” Carney said in the interview, which ran on
Global’s The West Block.
“I would say we’re a little more than half way along this
process of financial reform and this is really the tough bit
because this is where, you know, momentum could flag.”
The FSB is working with countries and banks to agree on
reforms that will make the global financial system more
transparent and prevent problems in the future, and Carney
admitted the changes would hit bank profits – a possible reason
for the pushback.
He said European countries would need sustained efforts to
improve competitiveness, fix banks and balance budgets.
“It’s not going to be measured in the course of weeks or
weekends, it’s going to be measured in the course of months and
years,” he said. “These are big sustained reforms that are going
to be required. There is going to be political difficulties that
are associated with that.”
But Carney said he expected the main problems to be
contained within Europe, and the near-term knock-on effect on
Canada was likely to be limited.
Carney repeated his warnings that domestic interest rates
were bound to rise from current record-low levels, with likely
problems for those borrowing heavily to get into a still hot
housing market.
“Interest rates eventually are going to rise so as you’re
taking on longer term debt, keep that in mind,” he said.
“What we’re really concerned about on an individual basis
is, it’s the people that come in at the end of the condo-boom,
if you will. It’s the people who stretch for that last dollar to
get the house, that they’re the ones who are the most impacted
by this situation.”
Canada escaped the housing price implosion seen in many U.S.
markets, and while prices dipped during Canada’s short-lived
recession, they soon recovered to well above pre-recession
levels, fueled by mortgage rates that have occasionally edged
just below 3 percent.
The government has already tightened rules at the Canada
Mortgage and Housing Corp, which provides mortgage insurance,
and Finance Minister Jim Flaherty said on Saturday that more
changes were possible.
Article source: http://www.reuters.com/article/2012/04/29/canada-fsb-carney-idUSL1E8FT0KD20120429