The Bankwatch

Tracking the consumer evolution of financial services

‘Open Canada’ | Report from Canadian International Council

Countries are still working out their responses to a globalised and inter-connected world.  This report from the Canadian International Council is an absorbing example of an approach for Canada.  Its the more absorbing because Canada sits on one of the longest borders in the world, with the United States.  One of the early themes is the reliance of Canada on free trade amongst US, Canada and Mexico, yet trade with the US is dropping sharply since 2000 as the US became more protectionist of its borders.  Exports to US have dropped from $37bn to $26bn in the period 2000 to 2008.  Considering the US is Canada’s largest trading partner (20% +/-) this is an important trend.

Another related theme is that for a relatively small country like Canada it must build on its strengths and bring a pragmatic approach to its dealings with other countries.  In real terms this means pick the strengths that are beneficial and abandon those that are not.  It turns out the US Canada border negotiations broke down because of Canada’s stance on protection of privacy and sharing of fingerprints, retinal scans etc.  At what cost does a Canada stick to such principles?

On the other hand, and more relevant to this blog, Canada has some real enduring strengths in fiscal conservatism and management of financial institutions. 

 Open Canada | CIC

This means Canada will have to work that much harder to find spots where we can exercise leadership, such as the Arctic Council, yet another Canadian creation, and global financial regulation. Today, our international finance officials stand out the same way our foreign service officers once did.

The financial crisis has presented us with a mini-Suez moment. We have our own interests at stake and  helping our friends and allies find a way out of the jam serves those interests alongside the greater good. We can show them what we learned digging ourselves out from 20-plus years of deficits and how we did it without igniting riots in the streets. We can show them how prudent financial regulation and market principles can co-exist. We can apply our knowledge and credibility to the development of some kind of ‘peacekeepers’ of the financial order.

Relevance to Bankwatch:

There are some quite deep and genuine themes that Banks could learn from and lever in this report.  For starters, if Canadian finance is as strong then why are more takeovers/ integrations/ partnerships not taking place between Canadian and US financial institutions.

Next up is Innovation.  Canada fares badly here.

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Yet it turns out three Canadian banks somehow made the list of innovative Canadian companies.  I must find the list, but either we don’t understand innovation, or we should lever this strength.

Innovation is the greatest generator of wealth in today’s global economy. Ideas have replaced industry on the  commanding heights of the postindustrial economy. Yet in a recent ranking of Canadian companies, the top dozen consisted of eight in the resource-extraction business, three banks and only one (Waterloo’s Research In Motion) that could be described as a homegrown innovation success.

By its nature this report is aimed at Government and the approaches they should consider, but Banks and particularly Canadian banks with their relatively large size within the Canadian economy have some role to play here.

Written by Colin Henderson

August 4, 2010 at 23:12

Posted in Uncategorized

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