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Bank of Canada governor outlines core G20 agenda to reduce systemic risk

06-11-2010 17:05 BJT

OTTAWA, June 10 (Xinhua) -- Bank of Canada Governor Mark Carney outlined on Thursday the G20's core agenda to reduce systemic risk and create a more resilient global financial system, saying that G20 leaders are working towards global reforms to put the world's financial system on a more solid footing.

In a speech to the International Organization of Securities Commissions meeting in Montreal, Quebec, Carney noted: "The global financial crisis exposed the fallacy of composition that strong individual financial institutions collectively ensure the safety and soundness of the system as a whole. Even the most vigilant, microprudential regulatory regime can be overwhelmed by systemic risks."

The governor outlined three principal strategies to mitigate systemic risk: increasing the resiliency of financial institutions; enhancing the robustness of financial markets; and reducing the interconnectedness between institutions and between institutions and markets. "These changes are radical, not incremental," the governor said.

Creating more resilient institutions requires more and better capital, improved balance sheet liquidity, and enhanced risk management, he noted. "The final capital proposals will make the global system look more like Canada's. For the world as a whole, however, the changes will be substantial."


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