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Post 5 : Video #4 - Global Banks in 'Cry-sis'?

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Post 5 : Video #4 - Global Banks in 'Cry-sis'?

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This video discusses how world economy and global banks are interconnected. This video gives a summary of the current banking crisis and the actions taken by central banks throughout the world to restore financial stability. It also highlights how even if this crises is resolved the public is losing trust in the financial sector which is a greater concern. The rising interest make it even more challenging for global banks to undo bad long-term investments. Global Banking standards and credit conditions are expected to tighten as a result of these crisis. Though Canadian institutions are expected to be more stable, worries about future job losses and economic slowdowns resulting from global financial turmoil remain.

I chose this video since it relates current state of the world economy and the role Canadian and global banking institutions have in stabilizing the crises ahead. One fact that stood out for me is the fact that these banking institutions are affected by public trust.

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Global central banks band together to prevent crisis

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Post 2 : Video #1 - Quick History Global Banking - Canada

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Post 2 : Video #1 - Quick History Global Banking - Canada

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The Bank of Canada's history can be traced to it origins back to the colonial era which let to its establishment in 1935. Central Bank which is a global banking system is crucial in regulating currency and banking, especially when there is economic instability as witnessed during the ' Great Depression'. This video takes us on a journey through time showing us the evolution of the global banking system in Canada. It shows the role it played in funding the war efforts in World War II (i.e issuing bank notes ) and continues to play in the world today while adapting modern economic practices.

I chose this video because it has detailed insight of how important global banking has been in Canada and how it continues to play role in the ever changing economy of Canada. One key information that stood out to me the most was the banks transition to polymer notes to increase its durability. It also shows how technology has advanced when it comes to currency production.

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A Canadian Central Bank: The History of the Bank of Canada

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Post 3 : Video #2 - Global Banking now - Canada

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Post 3 : Video #2 - Global Banking now - Canada

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This video reemphasizes the ever changing nature of the global banking system and its importance in our world today Bank of Canada is the leading lender and financial service provider to the fossil fuel industry even passing JPMorgan Chase. With the world moving towards clean energy, the video highlights the need for Bank of Canada to reconsider their investment strategies.

Interesting Fact: "Canada’s big five banks, including TD, have invested nearly $140 billion in fossil fuel developments. There may be a mismatch between their talk on climate action and their actual actions."

I chose this film video because it offers information on how economic policy, sustainability, and global banking are dependent on each other in todays world. One key information I found in this video was that this might be a huge transition in the upcoming years for the Canadian banking system as they are heavily invested in fossils fuels.

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What is the Bank of Canada's next move as IMF warns of "economic turbulence"?

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Post 6 : Website #1 - Global Banking, Canada and International Trade

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Post 6 : Website #1 - Global Banking, Canada and International Trade

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Canada has one of the highest outputs among the G7 countries where it comes to import and export. This article analyzes Canada's foreign trade environment and highlights how important it has been in history and continues to play a role in the current changing international trading realm. It talks about how trade has shaped the Canadian economy and emphasizes how crucial imports and exports are to the Canada's development and level of living. The video also discusses how global banking has benefitted the modern trade patterns and technology and the active role bank of Canada plays in changing trade policies and procedures.

I chose this video since it directly connects and gives us an understanding of the global banking system and international trade. One fact which stood out to me was the impact global banking can have on international trade policies and procedures.

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Introduction

My theme today is international trade, which is the lifeblood of the Canadian economy. Throughout our history, we have successfully relied on our exports and imports, particularly during the vast expansion of global trade in the decades following the Second World War, to support our rising standard of living. Today, exports and imports represent about 65 per cent of our output, one of the highest ratios among the G7 countries.

Few places in Canada illustrate the importance of trade and innovation as vividly as Saskatchewan. Historically, people living on the Prairies relied on exporting grain-and, more recently, potash and oil-to markets outside Canada's borders. They imported many of the products they consumed and the tools they used, from T-shirts to tractors. In the first several decades of Confederation, they often chafed at the trade barriers that were put in place to protect and nurture the growth of the manufacturing industries of central Canada. What is remarkable is how nimble businesses in this province have been. They have adapted and innovated not only to grow market share but also to develop new products and markets for them.

In recent years, the pattern and drivers of trade both nationally and in Saskatchewan have evolved dramatically in response to forces that have been acting at the global level. Innovations in many areas, notably information and communications technologies (ICTs) and logistics, have given rise to the development of new products and new ways of producing and trading them. A particularly important trend has been the emergence of global value chains (GVCs), with various stages of production located in different countries.

In this context, the progressive lowering of trade barriers worldwide has had outsized effects. Trade agreements have enabled much closer economic integration, and trade flows have burgeoned, leading to increases in productivity and living standards.

These trading relationships are now being called into question. Populist movements in some of our major trading partners are demanding new trade barriers. However, such protectionist measures would undoubtedly mean less trade, which would reduce economic growth. While I can't comment on the specifics of any particular agreement, we have certainly been assessing this shift toward protectionism, how it might affect the outlook for growth in Canada and its trading partners and ultimately what it would mean for the conduct of our monetary policy.

In my presentation today, I'll review the changing nature of international trade, the factors, such as innovation, that are propelling it and the benefits to Canada. I'll discuss the challenges Canada faces in its international trade and how they affect our economic outlook. I'll conclude with what this means for monetary policy.

The Great Unbundling

We used to think that the greatest benefits of trade accrued to countries with market dominance in specific industries. Think of Switzerland and watches or France and wine. Historically, Canada exported what we had in abundance-raw materials such as fur, fish and timber-and imported manufactured goods. Of course, this is still the case for much of our trade. But the biggest increase in world trade in recent decades has been intra-industry-that is, two-way trade within a given industry ( Chart 1). Some of that simply reflects product differentiation: Canada exports rye whisky and imports scotch and bourbon. But, even more importantly, the expansion of intra-industry trade has been enabled by the unbundling of different stages of the production process. 1

Consider the automobile industry: Canada both exports and imports auto parts at different stages of production as well as the finished product. The potential for this kind of unbundling was unleashed by technological innovations, particularly advances in ICT, which enabled the logistics needed to manage a supply chain that criss-crosses international borders. Bank of Canada research has shown that the separation of production into stages significantly increases the economic gains from trade. 2

In a world of GVCs, easing trade restrictions can also have outsized, positive effects on the economy and on trade flows. This has been described as "leveraging" because every unit of the final product-say, every car-incorporates a great deal of trade in the intermediate products and any reduction in costs imposed on trade can have cascading effects. Lower trade barriers also make it less expensive for firms to allocate different stages of production to countries where they are most efficiently produced. 3

What are the benefits to Canada of barrier-free, intra-industry trade within GVCs? Within any given industry, lowering trade barriers enables more efficient producers to expand to supply a wider market. That further lowers their costs as they move to a larger scale. Other, less efficient producers or plants may shrink or fail.

Canada's experience with the 1965 Auto Pact, the 1988 Free Trade Agreement with the United States and the 1994 North American Free Trade Agreement (NAFTA) are good examples of the economic impact of lowering trade barriers. 4 The North American market opened in the wake of the agreements ( Chart 2). Employment in manufacturing declined in the short term, but productivity rose and, in the longer term, the number of jobs in the economy increased. Efficient plants were able to expand to a scale that allowed them to capture even greater efficiencies. The improvement in productivity supported the growth in the overall earnings of workers. 5

Exports and imports are a two-way street-and both help deliver the benefits of barrier-free trade. Canadian firms can compete in foreign markets partly by making use of lower-cost imported inputs, which raises their productivity. 6 And their exports of intermediate products are linked to their trading partner's trade performance. For example, when we export machinery to the United States, it is an efficiency-enhancing input into their exports.

Benefits from opening trade may also come from increased competition. 7 This is the result of both opening one's home market to imports and gaining access to foreign markets.

Creative Destruction

More generally, innovation drives changes in trade patterns. This is economist Joseph Schumpeter's idea of creative destruction. 8 The new replaces the old. Firms inventing new products may expand their exports by penetrating new markets. They can also develop new production processes that enable them to produce at lower cost.

There are many such examples throughout the economy-in the high-tech industry as well as in many other sectors. For example, 45 years ago here in Saskatchewan, pulses such as lentils and peas were a small part of the province's farm economy. 9 In the 1970s, however, researchers at the University of Saskatchewan began searching for a protein crop to complement wheat, which was suffering from an oversupply and low prices. They saw the opportunities in lentils and developed new varieties suitable to the climate and soils of Saskatchewan. Today, the province is the world's largest exporter of green lentils and the world's second largest producer ( Chart 3). In 2016, exports of the crop generated more than $2 billion in sales. 10

Innovations in the production process can also drive export growth. Historically, this has been a major part of the history of Saskatchewan. New technologies, such as farm machinery and seed varieties, drove the consolidation of Prairie farms to take advantage of the greater ability to cultivate and harvest crops on a larger scale. Saskatchewan's farm production and exports expanded massively, even while its population steadily declined. That freed up workers to move into job opportunities opening up elsewhere in the economy, while increasing the productivity and incomes of those who remained ( Charts 4a and b). This is a story that has a personal connection for me: half of my great-grandparents were farmers in the Prairies, but none of their descendants is still farming.

I've been talking about how innovation drives trade, but the reverse is also true: trade openness drives innovation, too. This happens for two reasons. First, access to foreign markets exposes firms to new technologies and provides incentives for them to invest in producing more efficiently. 11 And second, competition from trade encourages firms to innovate and invent new products to maintain market share. Trade is also an important channel for knowledge to spill over across borders: an operation in one country can become competitive by combining its home advantages with the best techniques developed elsewhere. 12

While trade and innovation have always been interconnected, the nature of these interconnections is changing rapidly with recent advances in digital technology, touching virtually all sectors of the economy. We are only beginning to appreciate how new fields, such as artificial intelligence, cloud computing, additive manufacturing and big data, may play out in new trade patterns. Even calculating their economic impact is challenging. Returns from patented intellectual property (IP), such as software, are an increasing part of value added in electronic products, and these are hard to measure. That's also true of trade in IP services, which is becoming increasingly important. Google Chrome and Dropbox-distributed worldwide across the Internet-are good examples. Since they do not physically cross the border, there is no customs paper trail, and they are difficult to track. They are also provided free to many users, so it's hard to place a value on them.

This whole process of expanding two-way trade and technological advancement is playing out in myriad industries. It is one of the most important drivers of Canada's growth potential, which, in turn, underpins rising living standards for Canadians. While these are basically positive developments, they do pose important challenges for society and for policy-makers.

Both trade expansion and innovation are by their nature disruptive for firms and individuals. They spur growth by enabling more advanced and efficient activities and encouraging producers to expand, displacing less efficient activities and producers. This is an integral part of the whole process. Improved productivity is essential to compete internationally; without increases in productivity, the business itself and all of the associated jobs can be lost.

Historically, these changes have created many more job opportunities than they have eliminated. In particular, Canada's service sector, which has become an increasingly important source of exports, has created many new jobs paying above-average wages. 13 But still, some workers have been left behind. Moreover, the rewards for innovation, particularly in the digital economy, often accrue to the few who own the related IP.

Can public policy help smooth the transition? I should make it clear that this is not part of the Bank of Canada's monetary-policy remit, which is to keep inflation low, stable and predictable, allowing Canadians to make spending and investment decisions with confidence. But the disruptive effects of trade and innovation have been major topics of discussion internationally. These are very challenging issues that do not offer easy solutions. Clearly, we can't turn back the clock on technological innovation; nor is the answer to try to limit its scope by closing our borders. What we can try to do is focus on supporting workers as they adapt to changing economic realities. That requires investments in retraining and lifelong learning as well as social safety nets. Another priority is to make sure that profits, including those derived from IP, can't be shifted to avoid taxation. This includes stronger international co-operation-an area where the G20 has made meaningful progress.

Trade and Canada's Current Economic Situation

Now let me discuss the part international trade plays in Canada's current economic situation.

The period since the early 2000s has been challenging for Canadian exporters. The commodity supercycle not only created opportunities for resource exporters but also put upward pressure on the Canadian dollar, undermining the competitiveness of Canada's non-commodity exports. Then, during the Great Recession of 2007-09, foreign demand for our products collapsed, and our exports plunged by about 20 per cent. They rebounded quickly but then hit a long stretch of lacklustre growth. This was part of the broader global pattern: before the crisis, global trade had been expanding by more than 7 per cent a year-about twice as fast as the world economy. Since then it has been growing at a much more modest pace, closer to the rate of GDP growth. 14

Because Canada's relatively weak export performance has been a central aspect of our economic situation, the Bank of Canada has examined it in increasing detail. New measures of external demand for Canadian exports have been constructed, which better take into account how Canadian industries are positioned in GVCs. 15 Our staff have also constructed new measures of Canada's effective exchange rate that better capture Canada's competitiveness, not just relative to our export markets but also relative to third countries ( Chart 5). 16 This analysis contributes to a better diagnosis of Canada's loss of competitiveness.

Moreover, in keeping with the new concepts in international trade that I have been describing, our researchers have been examining Canada's exports at an increasingly disaggregated level, down to the individual firms involved. During the recession and its aftermath, many Canadian exporters went out of business. With those firms went many of their supply-chain linkages.

Another complex set of adjustments have been playing out during the past three years, with the plunge in prices of oil and other commodities. The economic and human costs to the resource-producing regions were huge. For Canada's economy to continue growing, the non-resource sectors-manufacturing and services-needed to grow faster and export more. Increasing foreign demand and the 25 per cent decline in the value of the Canadian dollar were forces supporting this adjustment. While this expansion of non-commodity exports did take place-exports of services were especially robust-the expansion was smaller than expected based on previous experience. Regaining market share was not just a matter of getting foreign customers to switch to a Canadian product. It often depended on a reassessment of where to locate production within a GVC-decisions that are typically not made often. To support the continuing growth of our international trade, many new linkages may need to be constructed as both new and existing firms emerge with new ideas and expand their activities to a sufficient scale. This process inevitably takes time and is still not complete.

The prolonged weakness of Canadian exports has meant that Canada's economy has needed to rely on other sources of demand to drive its growth. In particular, we have depended heavily on household spending, supported by very low interest rates.

Now, economic data show that growth in Canada is becoming more broadly based and self-sustaining. We are seeing widespread strength in business investment and exports, in conjunction with a global economic expansion that is becoming more synchronous ( Chart 6). Imports are also expanding; the increases we are seeing in imports of machinery and equipment and of various intermediate products are early signals of rising business investment. It was in this context that the Bank of Canada decided, in July and again earlier this month, to raise our policy rate. We will be paying close attention to how the economy responds to both higher interest rates and the stronger Canadian dollar.

Looking ahead, Canada's openness to international trade is an important determinant of Canada's economic growth potential-that is, of how fast the Canadian economy can grow without giving rise to inflationary pressures. That growth potential could be greater than we think-if businesses find new ways to engage with GVCs and develop new products and processes to make them more productive and competitive. As in the past, further expanding Canadian firms' access to markets and to imported inputs could unlock more opportunities. An example is the Canada-European Union Comprehensive Economic and Trade Agreement, most of which will be implemented in the next few days.

But some other developments are more concerning. With the rise in protectionist sentiment in some parts of the world, we have been entering a time of heightened uncertainty about the rules of the game on international trade. The possibility of a material protectionist shift-particularly regarding the outcome of negotiations on possible changes to NAFTA-is a key source of uncertainty for Canada's economic outlook.

Given the nature of international trade in the 21st century, the stakes are very high. As I discussed, the economic benefits we have experienced from trade liberalization were not only in expanding the markets for Canadian exports. We also benefit from the greater efficiencies that can be achieved by those exporters that do expand, the heightened competition and better access to imported inputs that come with greater openness to imports, and the resulting spur to innovation throughout the GVCs. If trading rules are changed in a way that undermines these benefits, the result would be both lost external demand for exports and lower potential growth for Canada as well as for the United States and other trading partners.

Conclusion

As an open economy, Canada's fortunes will continue to rise or fall with trade, as they have throughout our history. Global economic forces-the sharp movement of commodity prices; the Great Recession and the lacklustre global economy in its aftermath; and, for much of the past decade, a strong Canadian dollar-battered many of our export industries and splintered their supply chains. Rebuilding them requires the emergence of brand-new industries and the development of new linkages to international trade networks. While it will take time for many of these adjustments to play out, we are now seeing encouraging signs that exports and business investment are broadening and strengthening.

At the Bank of Canada, we have made a lot of progress in understanding the changing nature of world trade and especially why it has taken so long for our exports to recover. But as the dynamics of trade continue to evolve with technology and other forces, we will closely monitor and analyze these developments. This is essential, given the importance of trade to the economic well-being of Canadians.

I would like to thank Patrick Alexander and Karyne Charbonneau for their help in preparing this speech.

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How Canada's International Trade is Changing with the Times

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Deputy Governor Timothy Lane discusses the changing nature of international trade and the factors that are propelling it.

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Post 4 : Video #3 - The future of Global Banking

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Post 4 : Video #3 - The future of Global Banking

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This video discusses the increasing trend of artificial intelligence (AI) technology investments by Canadian banks in order too improve customer satisfaction and profitability. An example of such bank is TD Bank's acquisition of Toronto-based Layer 6 AI, which is a business which provides AI customer support. The banking system is also moving toward using data analytics and machine learning to predict consumer demands and provide tailored services in an efficient manner, and this is shown in the use of AI by banks such as RBC.

I selected this video because it provides us an insight on how the banking system is changing their approach and coming up with innovative solutions to make banking more efficient. One key point that stood out for me is TD's acquisition of a Toronto based company which provides AI customer service solutions.

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Canada’s banks turning to artificial intelligence to better serve client needs

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Post 9 : Website #4 - RBC Global Trade Online Service

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Post 9 : Website #4 - RBC Global Trade Online Service

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The RBC Global Trade is an online digital service which helps companies conduct international trade operations. RBC's global trade website highlights the characteristics and advantages of the Global commerce Online Service, this reduces the risks related to cross-border commerce and gives improved visibility and control over trade operations as well as help expedite the import and export process. The website offers details on how companies may use the platform, sign up for the service, and make use of its tools and resources to effectively manage their international trade operations.

I chose the RBC Online Trade Webpage because it is a direct example of how global banking effects trade in Canada. RBC Canadian based 'globally important' bank and it discusses the need for digital platforms to boost trade and efficiency while providing solutions to companies that international commerce. One fact that stands out to me the most is RBC provides features such a transaction tracking, compliance monitoring, and paperwork management.

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Manage Your Trade Business Anytime, Anywhere

RBC Global Trade™ is a comprehensive online platform that is used to issue, receive and manage trade transactions, including letters of credit, documentary collections and guarantees. It offers easy-to-use applications, templates, reporting insights and access to historical data anytime, anywhere.

Submit requests, applications and manage transactions for your letters of credit, guarantees and documentary collections - online, whenever it's convenient for you

Access your trade document images online

Easily access reports or customize your own

Control risk and manage your users by setting daily or transaction based limits

RBC Express® users can sign in once and go straight to RBC Global Trade

RBC Global Trade is Right for Your Business if You Want To:

Increase productivity by reducing the work effort required to prepare and manage trade documents

Simplify and streamline your processes through automation

Reduce manual input and keying errors and improve accuracy

Link directly to RBC Trade Service Centre, where all documents are processed

Reduce fraud with multi-level security features

Be In Control

Take Control of Your Trade Finances With the Ability To:

Access your trade documents online - anytime, anywhere.

Stay on top of your trade finance position. You will receive emails that notify you when an event has occurred or of non-activity.

Accept incoming documents electronically, or confirm non-acceptance if there is a discrepancy. (You will be notified whether documents are compliant or not as they come in).

Control the access to your trade finances by assigning different authorities to members of your business according to their job responsibilities - a measure that also helps reduce fraud.

Cut Down on Time and Costs

Reduce the Resources Required to Manually Create Trade Documents.

Set up templates for import letters of credit, letters of guarantee applications and export documentary collections.

Input data into templates that comply with your specific letter of credit requirements.

Issue letters of credit online. They will be SWIFT-ready trade instruments when they arrive at RBC Trade Operations for processing.

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Manage Your Trade Business Anytime, Anywhere

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The RBC Global Trade Online Service can help your business issue, receive and manage trade transactions.

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Post 7 : Website #2 - Canada leading Global Banking Financial Inclusion

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Post 7 : Website #2 - Canada leading Global Banking Financial Inclusion

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This article discusses how Canada is leading the way to incorporate and financial inclusion in locally and globally. It talks about how important it is to give minority groups like low-income people, newcomers, and Indigenous communities, more access to financial services. Policies are being put in place to remove remove obstacles and create financial inclusiveness, the article discusses examples of such digital efforts and technologies such as digital payment systems, and mobile banking. The article also discusses how using technology to close the gaps in financial education might help these minority groups have better access to credit and savings possibilities.

I chose this example as it is a great example of how Canada is directly leading in the global banking system. One fact that stood out to me was how Canada is leading the way for the global banking using a digital banking solutions. This is in line with the core values of Canada which it was built upon.

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Financial inclusion, which is the equal opportunity for everyone to access financial services, is a fundamental aspect of Canada's financial landscape. As technology continues to reshape the financial landscape, the banking industry is evolving to ensure that all citizens have access to critical services, including those who are more financially vulnerable.

Canada is a global leader in financial inclusion, with more than 99 per cent of Canadians having access to an account at a financial institution. In fact, Canada's financial system is the most inclusive among the G7 group of countries, according to recent World Bank data. i At the same time, as Canada's population expands rapidly, the growing number of newcomers and foreign students is driving an increased demand for banking services.

The swift pace of digitalization in the financial sector has led banks to advance financial inclusion, with the aim of providing all Canadians access to essential financial services. This shift isn't solely due to technological advancements, but also influenced by demographic changes driven by population growth. Accordingly, banks are making efforts to design more inclusive and personalized services to meet the diverse needs of a growing, and increasingly digital, customer base.

As consumer preferences continue to shift online, banks are responding by increasingly integrating digital technologies into their operations. In doing so, however, they must strike a balance between efficiency, security, and maintaining inclusivity. In this article, we explore how Canadian banks are leveraging responsible innovation, financial literacy programs, and accessibility initiatives to ensure Canada continues to be a financially inclusive and competitive country in the digital era.

Digital financial inclusion: the Canadian way

Canada's banking sector has embraced a digital-first (but not digital-only) approach to meet the diverse needs of an evolving and expanding population. In addition to a vast network of branches across the country, banks recognize the importance of ensuring that their online services are accessible, including by those who are more financially vulnerable. By responsibly adopting trustworthy digital technologies, banks are creating a more convenient and secure environment for their customers while helping them make better financial decisions.

Responsible innovation

Canada's banks design user-friendly products that enhance the customer experience, save time and money, and protect user data. Responsible innovation can significantly contribute to financial inclusion by offering cost-affordable and sustainable services tailored to customer needs. Artificial intelligence (AI) powered tools like RBC's NOMI, which has helped customers put aside more than $3.6 billion in savings, and Scotiabank's C.MEE, exemplify how banks can generate growth and empower all societal groups through digital innovation. Indeed, there are other examples at several banks.

As the adoption of AI and machine learning models increases across sectors, Canadian banks have also taken proactive measures to adopt AI in a responsible and trustworthy manner. They have developed internal strategies and safeguards to identify and address potential risks posed by these advanced technologies, such as incorporating AI into risk management frameworks. These proactive measures ensure that banks continue to place their customers at the center of responsible innovation.

Canada's banks are championing a future where financial inclusion and responsible innovation will go hand in hand. By embracing user-friendly digital solutions, fostering financial literacy, and ensuring trustworthy adoption of technologies like AI, banks are making great strides in building a thriving financial ecosystem for all Canadians.

Accessibility

Addressing barriers that impede access to innovative financial products and services is crucial for digital financial inclusion. Banks have implemented accessibility initiatives, such as expanded language offerings for digital banking services, to help break down these barriers. Public Accountability Statements from each bank demonstrate their commitment to promoting digital financial inclusion.

However, challenges remain as not all Canadians have internet connections or have access to smartphones. For instance, the Financial Consumer Agency of Canada (FCAC) requires banks to send electronic alerts when a customer's balance falls below a certain threshold, but customers who cannot receive electronic alerts may miss out on this service. Indeed, banks will continue to find ways to ensure that all Canadians can benefit from digital financial services without exacerbating Canada's digital divide.

Canada's banking sector welcomed the federal government's development of national accessibility legislation-the Accessible Canada Act (Act)-which aims to realize a barrier-free Canada by 2040. Banks will adapt and build their systems and processes to ensure they meet regulatory requirements under the Act and the associated regulations, including the upcoming publication of their first accessibility plans in June 2023.

Already leaders in this space, banks will continually work to improve the inclusive design of their products and services, and support accessibility for everyone because they do not view accessibility as a check-the-box compliance exercise. Rather, they work to tailor their accessibility solutions to the needs of their employees and customers, making successive investments in accessibility features and accommodation technologies that are constantly evolving.

Financial and digital literacy

Full financial inclusion requires users to have access to and regularly use digital financial services. The Canadian Bankers Association (CBA) and its member banks support the FCAC's National Financial Literacy Strategy by prioritizing digital access and literacy initiatives. Individual financial literacy programs, such as those offered by many banks in Canada, serve as a risk mitigant against potential fraud and consumer risks posed by online services.

Industry initiatives like the CBA's Your Money programs for students and older adults, as well as the CBA's wide range of fraud prevention resources, further contribute to a more financially inclusive Canada while improving consumer protection and confidence. These efforts further empower individuals with the knowledge and skills necessary to navigate the financial landscape and make informed decisions in their everyday lives.

Many CBA member banks have also implemented extensive financial literacy and fraud prevention programs that help mitigate against risks confronted by consumers in the digital era, including newcomers to Canada. Furthermore, these banks offer tailored programs aimed at assisting Canadians in navigating digital banking platforms, ensuring increased accessibility and user-friendly experiences for individuals from various backgrounds and skill levels.

The role of government and collaboration in supporting digital financial inclusion

While Canadian banks play a central role in promoting digital financial inclusion, they also recognize the importance of government initiatives aimed at creating an inclusive innovation economy such as the Universal Broadband Fund. Governments at all levels can support these efforts by investing in critical enablers like broadband infrastructure.

Bridging Canada's digital divide will further support financial inclusion. Such collaborations ensure that Canadians, particularly those in rural and remote areas, have the digital resources and tools needed to participate fully in today's increasingly digital financial marketplace.

The way forward

Canadian banks are leading the way in using digital innovation to bolster client responsiveness, demonstrating their commitment to responsible innovation, financial literacy, and accessibility initiatives. As the digital transformation of the financial sector continues to accelerate, it is important that banks and governments work together to ensure that all Canadians can benefit from these advancements.

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Accelerating financial inclusion in Canada through digital innovation

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Financial inclusion, which is the equal opportunity for everyone to access financial services, is a fundamental aspect of Canada's financial landscape. As technology continues to reshape the financial landscape, the banking industry is evolving to ensure that all citizens have access to critical services, including those who are more financially vulnerable.

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What did you learn about your topic that surprised you the most?

During my research on this topic I was surprised to learn how crucial the Global Banking System is and how interconnected Canadian financial institutions are with global banking regulatory requirements. In addition , I was able to understand how RBC and TD Canada holds an important role to ensure stability of the economy world wide.

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Provide a real-life example of how this topic is relevant or interesting for you.

I currently have a TD Credit Card and Chequing account, and TD being one of the 'Global Systematically Important banks' it puts in to perspective , as well as gives me confidence that a lot is at stake other than my money if the bank was to fail. There are stringent regulations and policies in place to help monitor and ensure successful operation of such banks.

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If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

One thing that I would share with a family member or friend would be that fact that Canada is leading the global banking industry in Financial Inclusiveness. Canadian banking institutions have realized how access to financial servies may be limited to minority groups. Institutions like RBC is using tools driven by artificial intelligence , such as Scotiabank's C.MEE and RBC's NOMI, which empowers all groups in society and has helped clients in setting aside over $3.6 billion in savings.

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Post 10 : Image #1 - Canadian Bankers Association (CBA)

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Post 10 : Image #1 - Canadian Bankers Association (CBA)

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CBA is an example of a Canadian banking association that handles more than 60 domestic and international banking institutions. The goal of CBA is to align Canadian banks to regulatory requirements which are standard globally, in order to ensure that they reach their financial goals.

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Post 11 : Image #2- Global systemically important banks

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Post 11 : Image #2- Global systemically important banks

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'Global Systematically Important banks' are large , complex and interconnected with domestic banks, which according to ' Canadas Office Superintendent of Financial Institution ' will have a significant global impact on the economy , if these banks were to fail.

Two globally systemically significant banks are based in Canada:

1) Canadian Royal Bank
2) Dominion Bank of Toronto

These two banks have more strict regulations as their failure might have an impact on the entire world.

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Post 8: Website #3 - The Impact of Global Banking Regulations and Canada

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Post 8: Website #3 - The Impact of Global Banking Regulations and Canada

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This article provides a great example on how Canadian banks are affected by global banking financial laws. Basel III is an example of an global banking system framework which effects Canadian banking institutions operating and risk management strategies. It further expands the effect of regulatory requirements and how they affect risk assessment, liquidity management, and capital adequacy. Additionally the article discusses how Canadian banks might have to comply with these rules and still remain competitive and financially stable in the global banking market.

I chose this article because it provides a detailed analysis of how Canadian banks and international banking rules interact, and how global standards effect local policies. One fact that stands out to me is how Canadian banks have to navigate through the challenges of ever changing global banking standards.

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Canada's prudent banks, combined with effective regulation and supervision, form a model of stability in the global financial system.

Fast facts

During the 2007/08 global financial crisis, unlike banks in many other countries, no Canadian banks were bailed out or in danger of failing.

The 2007/08 crisis resulted in a series of significant regulatory changes for the international banking sector.

The COVID‑19 pandemic of 2020/21 presented a new set of challenges that required governments and regulators to adopt measures to preserve financial stability.

Canadians understand this: When asked to rate the performance of banks in Canada on stability and security, 75 per cent of Canadians provided a favourable rating.

The bottom line

The World Economic Forum has consistently ranked Canada's banks as among the soundest in the world. Canada's prudent banks, combined with effective regulation and supervision, form a model of stability in the global financial system.

Significant regulatory change continues

During the 2007/08 global financial crisis there was significant turmoil in the global financial system and a number of banks in other countries became insolvent and either failed or received taxpayer‑funded bailouts. However, no Canadian bank was in danger of failing or needed a government bailout. Canada's banks were well capitalized, well managed, and well regulated going into the global financial crisis, and remain so to this day.

Canada's banks were well‑capitalized, well‑managed, and well‑regulated going into the global financial crisis, and remain so to this day as we emerge from the COVID‑19 crisis. During the pandemic, Canada's banks played a critical role in supporting the Canadian economy and the financial well‑being of Canadians and demonstrated their ongoing resiliency.

While banks in Canada are extremely unlikely to fail, Canadian banks have developed "recovery and resolution plans" that would help the bank recover from financial distress or bring about an orderly resolution in the event of their failure.

However, the global financial crisis led to a series of significant regulatory changes to international banking rules, which are designed to reduce the risk of another financial crisis occurring. While these rules are developed internationally, it is up to domestic regulators to put them in place and enforce them.

There are many important participants - including Canadian policymakers and regulators - involved in shaping and adapting these regulatory changes for Canada's financial system. [See Table of Main Participants below.]

The most significant changes to global banking rules have been in the areas of capital and liquidity. Both the quantity and quality of capital - which helps banks absorb losses - have been increased. In addition, new liquidity requirements have been put in place to help ensure that banks can meet their financial obligations, even in times of stress.

Financial markets are globally integrated. So in the end, the aim is that consistent implementation of these regulatory changes in countries around the world will result in a better functioning global financial system.

Banks in Canada - through and with the Canadian Bankers Association - are working closely with domestic and global regulatory organizations to implement all of the international regulatory changes.

Regulatory Changes

The most significant changes to global banking rules have occurred in the area of capital and liquidity. These changes are described in greater detail below.
1. Capital
"Capital" is the money that bank owners have invested in the bank, either through the purchase of shares or through retained earnings. A bank holds capital to help protect depositors and other stakeholders against losses in the event that borrowers default. Capital is a cushion against the negative impacts of bank‑specific and market‑related activities that could jeopardize a bank's ability to stay solvent and continue to serve Canadians.
Basel III capital rules
There are several categories of rules related to capital under Basel III. Taken together, these rules now require banks to hold enough capital to equal at least 10.5% of their total risk-weighted assets.
Global and domestic systemically important banks

In 2013, the Office of the Superintendent of Financial Institutions (OSFI) named the six largest banks in Canada as "domestic systemically important banks" (D-SIBs). As a result, these six banks are required to hold an additional one per cent of capital as of January 1, 2016 (D‑SIB surcharge), and are also subject to a Domestic Stability Buffer (DSB) that ranges from 0 to 2.5 per cent of capital along with more intense supervision and enhanced disclosure requirements.

The Royal Bank of Canada and Toronto‑Dominion Bank were designated by the Financial Stability Board as "global systemically important banks" (G-SIBs) in 2017 and 2019 respectively, but are not subject to any additional capital requirement beyond the existing D-SIB surcharge and DSB.

The G‑SIBs and D‑SIBs are treated the same by OSFI given the potential impacts that a failure of any one of them would have on global and domestic economies.

For small and mid‑sized banks, OSFI is developing proportional reflecting the more limited systemic risk associated with smaller financial institutions.

What is Basel III?

Basel III was developed and agreed to by members of the Basel Committee on Banking Supervision (BCBS). This is a longstanding committee of the Bank for International Settlements (BIS) that is mandated to review and develop banking guidelines and supervisory standards at a global level.

Basel III is a framework that sets out global regulatory rules for bank capital and liquidity. These rules were originally published in December 2010 in response to the global financial crisis and are subject to ongoing review and updates. In December 2017, the BCBS issued some notable updates entitled ' Basel III: Finalising post-crisis reforms '.

The phase-in of Basel III capital rules began in 2013. Canada implemented these changes in January 2013, well ahead of many other countries and well ahead of the Basel III timeline. The phase-in of Basel III's liquidity rules began in 2015. Canada is now on a path towards implementation of the Basel III reforms starting in November 2022.

For more information, go to http://www.bis.org/.

Basel III capital rules as they relate to banks in Canada

The Capital Adequacy Requirements (CAR) Guideline reflects how Canadian regulators are implementing the Basel III capital rules in Canada. In December 2012, OSFI issued a revised CAR Guideline to incorporate earlier Basel III reforms and made further updates in subsequent years. OSFI is now in the process of concluding its consultations on the Basel III reforms and expects to publish an updated CAR Guideline in November 2021. In most cases, the updated rules will be implemented starting in November 2022.

Under the CAR Guideline, OSFI already expects banks to meet target capital levels that equal or exceed the 2019 Basel III minimum capital requirements.

Under a separate Leverage Requirements Guideline,¹ OSFI expects institutions to maintain a leverage ratio that meets or exceeds 3 per cent at all times. OSFI also prescribes authorized leverage ratio requirements for individual institutions.

2. Liquidity
"Liquidity" refers to the ease with which assets can be converted into cash (i.e., liquidated) and sold. For banks, good liquidity is important because it bolsters their resilience to internal and external shocks.
Basel III liquidity rules

The Basel Committee on Banking Supervision (BCBS) has developed two minimum rules for liquidity - the Liquidity Coverage Ratio (LCR) that has a 30-day horizon, and the Net Stable Funding Ratio (NSFR) that has a time horizon of one year. Both metrics have now been fully implemented in Canada.

The LCR rules are meant to ensure banks have sufficient, high-quality liquid assets to withstand a period of economic stress.

How OSFI is implementing liquidity rules for banks in Canada

OSFI issued a revised Liquidity Principles Guideline B6 made updates for the liquidity metrics (e.g. LCR/NSFR) in the Liquidity Adequacy Requirements (LAR) Guideline. These guidelines describe how the regulator assesses the strength of a bank's liquidity risk management framework and whether the bank would have adequate liquidity under stressed conditions.

OSFI's approach is consistent with the BCBS's September 2008 Principles for Sound Liquidity Risk Management and Supervision.

3. New forms of risk
As we exit the shadow of the financial crisis, banks and regulators around the world, including OSFI, are shifting focus towards new and evolving forms of non-financial risks such as risks related to COVID-19, technological innovation and climate change.

In relation to COVID-19, OSFI announced the unwinding of the special capital treatment of loans subject to payment deferrals at the end of August 2020. This was followed by the unwinding of other regulatory adjustments that were implemented during the pandemic related to market risk capital requirements and the covered bond limit. In June 2021, OSFI also announced that the DSB would be raised from one per cent to 2.5 per cent effective October 31, 2021.

OSFI is evolving its regulatory and supervisory approach as part of its strategic goal to improve banks preparedness for, and resiliency to, non-financial risks. In doing so, OSFI recognizes the importance of banks providing innovative financial services to Canadians while also fostering trust and confidence in the financial sector.

In 2020, as part of its work on non-financial risks OSFI also sought feedback through a discussion paper on a broad range of issues related to technology risk. These issues included cyber security, third-party risk and advanced analytics. OSFI has subsequently signaled next steps with a proposed schedule setting out upcoming guidance initiatives including developing a new technology and cyber risk guideline and a revised draft guideline on third-party risk.

In January 2021, OSFI issued a Discussion Paper on climate-related risks in the financial sector which considered the impacts of such risks and how banks and other federally regulated financial institutions and pension plans could prepare for and build resilience to these risks. OSFI expects to publish a letter in the coming months that will summarize feedback received and describe their future plans in this area.

As part of its work on non-financial risk, OSFI also plans to seek feedback from the industry on the incorporation of the BCBS' principles for operational resilience and the revised principles on operational risk management into domestic guidance.

Table of Main Participants

A number of organizations are involved in aspects of the regulatory changes underway. The table outlines the main participants and their role(s) in global regulations as it pertains to banks in Canada.

NAME OF PARTICIPANT ROLE(S) IN REGULATION

Global

Domestic

¹ "Leverage Requirements Guideline", October 2014, http://www.osfi-bsif.gc.ca/eng/docs/lr.pdf
² "Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools", January 2013, www.bis.org
³ "Basel III: The Net Stable Funding Ratio", October 2014; and "Basel III International framework for liquidity risk measurement, standards and monitoring", December 2010, www.bis.org

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global banking regulations and banks in canada

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Focus: Global Banking Regulations and Banks in Canada

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Canada's prudent banks, combined with effective regulation and supervision, form a model of stability in the global financial system.

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Looking to know about Global Banking?

Whether you're a student, an aspiring economist, or simply curious about how the banking system operates on a global scale, you're in the right place.

This Padlet will dive in to the interesting and ever changing world of global banking.

Explore the videos , websites and images in this Padlet to gain insights on the importance , challenges as well as impact of global banking on the economy and society.