At a Crossroads: Financial Sector Reform in Canada

In late June 1999, the federal government’s White Paper was released outlining a vision for the future of the Canadian financial services sector. At issue was how to balance the need to adapt to a changing global environment while maintaining (or improving) the sector’s performance within the Canadian economy.

Document Highlights

The strategy chosen by the government was to put limits on the largest financial institutions while encouraging the growth and expansion of a second tier of financial institutions. If successful, the result would be a stronger Canadian financial system, one less dominated by a few large firms.

There are also significant risks in handicapping the firms most able to meet the international competition. The next decade will tell whether the compromises in the White Paper will hold up under the pressures of change, or whether they will need a re-evaluation.