Public sector financial institutions proved their worth during economic
crisis

OTTAWA, Jan. 28 /CNW Telbec/ - Public sector financial institutions play a critical role as a backstop for the global financial system, which they proved during the 2008-09 economic crisis, the Conference Board argues in a new publication - part of its series on lessons from the recession.

"Just a couple of years ago, it was fashionable in some financial and economic circles to question why many of these institutions should continue to exist. Once a financial crisis hits, however, it is too late for governments to create institutions to provide fall-back credit support - they must already exist," said Glen Hodgson, Senior Vice-President and Chief Economist. "During the crisis of the past 15 months, these institutions - internationally and in Canada - proved their collective value as policy tools for shoring up a severely weakened global financial system."

On the global stage, public sector financial institutions - such as the World Bank and International Monetary Fund - stepped forward as lenders and policy advisors, helping to build a floor under the collapsing global credit system.

In Canada, the federal government's financial institutions - specifically the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) - provided exceptional credit support in a time of crisis.

The federal government invested an additional $350 million in BDC's capital base in order to strengthen BDC's capacity to take risks and innovate in this challenging period. For EDC, the federal government invested a similar amount - $350 million in new capital - to support up to $1.5 billion in increased credit capacity for those most affected by the financial crisis. Collectively, these organizations have helped to speed the healing of the Canadian financial system, and they will continue to have a significant role to play in the future.

This publication, Lessons From the Recession and Financial Crisis: Lesson 2 - Public Sector Financial Institutions Prove Their Worth, is part of the Conference Board's ongoing series. Previously released publications included Overview - What Caused the 2008-09 Financial Crisis and Recession? (http://www.conferenceboard.ca/documents_ea.aspx?did=3381) and Lesson 1 - The Financial Sector is Unique and Needs New Standards (http://www.conferenceboard.ca/documents.aspx?DID=3387). The Conference Board's Forecasting and Analysis (http://www.conferenceboard.ca/topics/economics/default.aspx) team has examined the developments of the past year and has drawn key lessons for the world and for Canada that deserve priority discussion among policy makers and business leaders.

SOURCE Conference Board of Canada

For further information: For further information: Brent Dowdall, Media Relations, Tel.: (613) 526-3090 ext. 448, E-mail: corpcomm@conferenceboard.ca


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