Issues in financial reform
Article Abstract:
Organization of the Canadian financial system is in flux, much as in Britain, Japan, and the US. The objective of financial system regulation is to foster balance in system access, competition, and public confidence. Regulation may assume such forms as corporate governance, self-regulation, or direct government intervention. Financial system 'concentration' is a measure of competition. Canadian market concentration has been generally high but tending to decrease in recent years. The four largest banks in the deposit market accounted for about 48 percent of deposits in 1984, down from 54 percent in 1979. The mortgage market shows the lowest market concentration, with the four largest companies holding 33 percent of outstanding total mortgages. Ownership concentration has been increasing due to merger and acquisition activity.
Publication Name: Au Courant
Subject: Business, international
ISSN: 0226-224X
Year: 1987
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Toward a healthier system
Article Abstract:
The Economic Council of Canada recommends new rules on conflicts of interest, improved corporate governance, and increased consumer protection, to enhance the health of the Canadian financial system. The Council wants financial institutions to establish special committees that would review all major 'non-arm's-length' activity. The Council would ban loans to company managers and to shareholders owning over 10 percent of outstanding voting shares. Proposals would also modify auditors' roles and revise rules on how financial institutions may invest their funds. The Council recommendations provide for more generous insurance limits on consumer deposits that are part of registered retirement savings plans. The Canada Deposit Insurance Corp would share supervisory powers with federal bank regulators.
Publication Name: Au Courant
Subject: Business, international
ISSN: 0226-224X
Year: 1987
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A framework for reform
Article Abstract:
The Economic Council of Canada recommends reform of the Canadian financial system. A 'regulation-by-function' approach is urged, which would restrict each financial institution to one major, well-defined financial function, such as banking or insurance. The proposed reforms would require financial cooperatives and trusts to hold noninterest-bearing reserves against deposits. Trust companies could continue to deliver a variety of services through existing retail networks, since separation of banking and trust services would happen at production levels only. The main benefit of the proposed systems would be to eliminate regulatory overlap and clarify shared federal and provincial responsibilities.
Publication Name: Au Courant
Subject: Business, international
ISSN: 0226-224X
Year: 1987
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