Bank taxes being implemented by countries such as Britain, Germany and France reek of moral hazard, Bank of Canada governor Mark Carney said Wednesday.
That is why Canada will push hard, at the G8 and G20 summits, to focus on core issues of capital, liquidity, resolution mechanisms for firms in distress and structure of the financial system.
A fund to be tapped in times of distress will do nothing to ensure market discipline. "It just reeks of moral hazard," Carney told business leaders.
He said he is confident the international effort to reform global banking rules known as the Basel process is "very much on track." Banks around the world are already boosting capital levels in preparation for planned implementation in 2012.
Another key challenge for major countries is how to balance the need for continued economic stimulus with the need to keep debt levels under control, Carney said.
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