Carney - rebuilding trust in financial system needs more work
By Russ Blinch | February 26, 2013 4:21 AM EST
Banks and regulators need to do a lot more to rebuild the trust in the financial system that was shattered in the recent crisis, Bank of Canada Governor Mark Carney, head of the G20's Financial Stability Board, said on Monday.
The Group of 20 leading economies has made progress in financial reforms which will go a long way, but these alone will not be sufficient, he said in a speech to business students at Western University in London, Ontario.
"Virtue cannot be regulated. Even the strongest supervision cannot guarantee good conduct. Essential will be the rediscovery of core values, and ultimately this is a question of individual responsibility," Carney said.
The lack of trust in major banking systems "deepened the cost of the crisis and is restraining the pace of recovery," he said in the prepared text of his speech, which made no mention of Canada's economic or interest rate outlook.
"There is a growing suspicion of the benefits of financial deregulation and cross-border financial liberalization, a suspicion that could ultimately undermine support for free trade and open markets more generally," he said.
Carney said progress in the G20's financial reforms was "not yet fully reflected in market valuations or public attitudes," lamenting that the good work done so far had been overshadowed by a spate of scandals including rigging Libor interest rates.
Reduced trust in the financial system has increased the cost and lowered the availability of capital for non-financial firms, with access to credit remaining strained despite the massive response of central banks, he said.
Carney, who will leave Ottawa to become governor of the Bank of England in July, spoke of the risk of the balkanization of the banking system as some supervisors try to ring-fence bank subsidiaries in their own jurisdictions to make sure they are resilient on a stand-alone basis.
Ironically these efforts would reduce systemic resilience globally, and if left unchecked could substantially decrease the efficiency of the global financial system, he said.
(Writing by Randall Palmer; Editing by David Ljunggren and James Dalgleish)
Most Popular Slideshows
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- iOS 8 Jailbreak Release Date Likely this October 2014 with Pangu not Evad3rs Firming Up as Creator
- Chilling: New ISIS Video Addresses Australia; Aussie Teen Delivers Message
- Xiaomi Mi4 And MiPad Prices Likely Slashed, Thanks To Rivals Oppo, OnePlus And Meizu
- The Pirate Bay Blockade: Cost Of Blocking Websites Like TPB Is Ridiculously High
- Top 4 Free-To-Download Apps for Fuller iPhone 6, 6 Plus Experience
- Battery Saving Android 5.0 Lollipop Feature Extends The Battery Life Of Your Android Device By 90 Minutes And Displays Orange Bar While Power Saving Mode Is On
- Russia Beefs Up Gold Reserves To Offset Heat of Sanctions And Undercut Dollar