OTTAWA, Feb. 25 /CNW Telbec/ - Calls for a redesign of global capitalism
are misplaced, but strengthening of national regulation and supervision is
required to avoid a recurrence of the recent financial meltdown, according to
the recommendations of a Conference Board report released today, International
Financial Policy Reform and Options for Canada: Think Globally, Act Locally.
"The current financial crisis has led to calls for greater financial
regulation, including the creation of a global financial regulatory body, and
for a new form of capitalism," said Paul Masson and John Pattison, authors of
the report. "However, countries should accept responsibility for their
regulatory and supervisory failures; the creation of a global regulator is
neither practical nor desirable. National regulators are better placed to
monitor and take appropriate policy measures."
Published for the Conference Board's International Trade and Investment
Centre, the report recommends that Canada should argue for maintaining open
financial markets. While regulatory improvements are required, government
intervention needs to be limited and carefully managed.
Canada should argue against over-regulation and resist calls for a
"reformulation" of global capitalism. Canada has suffered less than many
countries because of its more conservative regulation and the strength of its
banking system. As a result, our financial institutions may be more
competitive in this global environment.
Bank regulation needs to increase capital requirements to account for
trading room risks and risks from securitizations. Canada should support
measures to improve the transparency of securitized financial products-those
bundled and sold as packages of assets. Improved risk disclosure is among the
measures needed to restore confidence in this important financial channel. In
addition, issuers of securitized financial products must be required to
maintain some of the risk.
The private sector has a role to play. For example, financial
institutions should compensate senior management and key employees based on
3-to-5 year performance rather than one-year results, and discourage taking on
large risks to generate short-term returns. Masson is Adjunct Professor and
Research Fellow at the University of Toronto's Rotman School of Management.
Pattison has 40 years experience in the financial sector.
The International Trade and Investment Centre helps Canadian leaders
better understand what global economic dynamics- such as global and regional
supply chains, domestic barriers to trade or tighter border security- could
mean for public policies and business strategies.
For further information:
For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448, email@example.com