The federal government wants to promote competition in the financial sector, but this could mean some banks will fail in the future, so Canadians need to be aware of that, says a former banking regulator.
“The public should not be surprised if, in the years to come, institutions encounter difficulty simply because a more competitive environment means the risks go up as well,” said Mark Zelmer, a senior fellow at the C.D. Howe Institute and a former deputy superintendent at the Office of the Superintendent of Financial Institutions (OSFI).
The federal government announced a series of proposals in its latest budget to boost competition in an industry that’s dominated by the Big Six banks, but it also included proposals that mean it could be preparing for the risks that come with that.