TORONTO, ONTARIO--(Marketwire - May 25, 2011) - In his first speech as President and CEO of the Canadian Bankers Association, Terry Campbell today highlighted the importance of maintaining Canada's strong banking system for the benefit of all Canadians, in light of increasing global and domestic financial regulation. During the luncheon address to the Toronto Board of Trade, Mr. Campbell emphasized that a profitable banking sector is critical to supporting Canada's economic recovery and highlighted the global and domestic policy issues that must be addressed to ensure that Canada maintains its current financial sector advantage.

"There is a tendency to think of the new regulatory architecture – Basel III and the Financial Stability Board standards – as yesterday's story because the broad framework has been agreed to," Mr. Campbell stated in his address. "Far from it – we are in the middle of the biggest implementation operations our members have ever experienced, and there's more to come."

Global financial regulation - a level playing field needed

Noting Canada has a well-respected banking brand on the global stage, Mr. Campbell stressed that we need to maintain that advantage, particularly in light of the new international regulatory environment. Important work is still being carried out by international regulatory bodies to finalize: liquidity and leverage measures; non-viability contingent capital standards; the criteria that will identify systemically important financial institutions; and a range of other regulatory matters.

"Pressures from outside of Canada to apply regulations to our best-in-class banking system show no sign of abating. It is important, therefore, that Canadian officials act as a voice of experience and moderation both when dealing with international standard-setters and as they apply these rules in our domestic context," said Mr. Campbell. "The CBA and our member banks want to work very closely with the government and our regulators to make sure that we get it right. And we need to make sure that additional regulatory measures are balanced and don't have unintended consequences on the rest of the economy."

Capping credit card interest rates would harm consumers

Credit card interest rates is another issue that Mr. Campbell touched on in his address. Noting that some are calling for regulated caps to credit card interest rates, Mr. Campbell highlighted the fact that two-thirds of Canadians pay off their credit card balance in full each month, so pay no interest at all, and that credit card debt accounts for only five per cent of total household debt. He also noted that there are more than 50 low-rate credit cards available in Canada.

"Competition and choice for consumers must continue to be the hallmarks of Canada's credit card system," said Mr. Campbell. "Capping credit card interest rates at arbitrary levels would harm the very people it is meant to help, by reducing choice in the marketplace and rationing credit. Ultimately, it would not be in the best interests of Canadian consumers."

Protecting the federal jurisdiction over banking

Focusing on domestic issues, Mr. Campbell noted that while Canada's regulatory system has been recognized as among the world's most effective, it doesn't mean that improvements aren't needed or that there aren't dangers to be avoided. One area of concern highlighted in the speech is the growing efforts by provinces to regulate the business of banking. For example, the federal government should be the policy maker for banks in areas such as credit cards and consumer regulation relating to banking to ensure national uniformity.

"Let's be clear, banking is a matter of federal jurisdiction," said Mr. Campbell. "Efforts by provinces to regulate banking work against international standards that require strong and coherent bank regulatory regimes at the national level and they introduce unneeded inefficiency to our national economy. As well, they cause confusion for consumers by creating inconsistencies and different standards of service across the country."

Mr. Campbell concluded his presentation by stressing that, although a strong degree of uncertainty remains in the international regulatory environment, Canada's banks are working hard to make sure that Canadians continue to have the best banking system in the world.

The full text of the speech is available through the following link:

The Canadian Bankers Association works on behalf of 52 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 267,000 employees. The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians and Canada's economy. The Association also promotes financial literacy to help Canadians make informed financial decisions.

Follow the CBA on Twitter: @CdnBankers

Contact Information:

Canadian Bankers Association
Andrew Addison
(416) 362-6093, ext. 220
Cell: (416) 587-7733