Canada is known for its diverse urban and rural environment. From scenic mountains and glaciers to untarnished lakes and forests of rural areas to the spectacular and lively vibe of urban communities and cities like Vancouver and Montreal, the country remains unchallenged worldwide. But Canada’s allure doesn’t just come from its natural beauty and diversity. The country also features a strong and stable economy.
Canada’s banking system is one of the many reasons why the country is a great place to finance and conduct business matters. 83% of Canadians have reported exceptional performance scores for their country’s banking stability and security. 91% of people using Canada-based banks have complete trust with their deposits being safe and secure. 92% of people in Canada agree that the capabilities of large Canada-based financial firms play a crucial role to the well-being and stability of the worldwide economy.
Apart from these impressive reports, the World Economic Forum has even ranked the country’s banking system as the sturdiest in the globe for five years straight. So, what makes Canada’s banking system a powerful one? Is it really a more advantageous option to finance through a Canada-based bank?
One of the many reasons to finance in Canada is its solid regulatory networks. The country employs a streamlined bank regulatory network that is backed up two large regulators – the Office of the Superintendent of Financial Institutions and the Financial Consumer Agency of Canada. On the contrary, the U.S. employs a complex system of different regulators.
Canada is further empowered by a so-called Bank Act, which undergoes regular reviewing and updating every 5 years to guarantee the management structure is able to keep its pace with the latest advancements and changes on the market. Canada’s banks are also well-capitalized. In fact, they are among the largest capitalized banks in a worldwide scale. This enables banks to continue provisions of loans and mortgages as well as offer a finance cushion against debt loses.
Banking in Canada has all the advantages of depositing your money into any other developed country. Because Canada is friendly and open with Europe and North America, funds from this country are liquid throughout the world. Canada has a particularly friendly relationship with Great Britain, as it is Commonwealth nation and a former British colony.
Banking in Canada is a safe and solid opportunity, although it is subject to the laws and jurisdictions of that country. It is a safe investment at the moment, because Canada has relatively stable finances. Many European countries face austerity and collapsing credit because of their national debt. Canadians still have loads of discretionary spending, which means that their banks will stay open for a long time.
While the United States has the Federal Reserve, Canada still has a government owned financial institution called the Bank of Canada. This institution creates bank notes and has extensive branches throughout the country. Other banks have historically been quite independent and solid enough that they do not normally have liquidity issues.
The Canadian Dollar is quite stable and the inflation rate is regulated by the Bank of Canada. Because the same institution is also authorized to lend to other banks when there is a crunch of available credit, it tends to keeps private financial institution in balance even if there is a massive loss of confidence in Banking in Canada. Because Canada’s monetary and banking system is well supervised, it is quite secure against loss.
For British investors, it is possible to change pounds into Canadian dollars. Pounds are no longer recognized as currency in Canada, although many large banks have a stockpile of this critical foreign currency. There are no restrictions on monetary exchange, so it is possible to do this without much trouble. It is quite easy for people in England to invest in the Canadian stock market, and many do Banking in Canada quite profitably.
The Canadian economy is faring better than most countries in the G8 mainly because they have managed to keep their debt levels in line as a percentage of the GDP. In fact, Canada has the lowest debt levels of the G8 nations. Historically, when a nation suffers a private sector crisis, the federal government can respond to the crisis by taking on debt to intervene in the market and stabilize credit markets and safeguard the economy. However, that response will only work if the country has a relatively good debt level otherwise that country will face rising interest rates which can prove too high to pay off. It’s that very scenario that has caused bailouts in Portugal, Italy, Ireland, and Spain to backfire.
Canada itself has high unemployment at 7.2% but that too is relatively good for a post-2008 developed nation. Spain’s unemployment currently stands at 25% so while the Canadian economy is barely growing, they are poised to endure the lingering effects of the crisis better than most. It should be noted that Canada is heavily dependent on exports and that has a tendency to make the economy vulnerable to a global recession. However, in the case of Canada, their major export is energy via their vast petroleum and natural gas reserves. The United States is Canada’s largest trading partner and currently imports billions of dollars’ worth of energy annually. For example, the oil-sands pipeline will bring substantial amounts of petroleum from Canada into the USA. Canada will continue to benefit from their effective use of their natural resources which has been their key to staying afloat during the crisis. In fact, for nearly two years the Canadian dollar has been trading stronger than the US dollar which is a first in Canadian history. Despite the continued slowdown in the global economy, Canada continues an anemic but steady recovery of its own – a position many other nations would love to be in.