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“The already comparatively strong capital and liquidity positions of Canada’s financial institutions have strengthened further over the past six months.” In its latest Financial System Review, the Bank of Canada strikes a cautiously confident tone about the country’s financial industry.

Conservative business models and tough regulation made Canadian banks standout performers in the West throughout the financial crisis. They are now the developed world’s “most reliable money-making machines,” according to a recent article at the parent site.

Indeed, as the central bank points out, return on equity at Canadian lenders has consistently beat rivals in America and Europe in recent quarters. Still, ructions in global credit markets may make it difficult for even the strongest bank to refinance debt; the six dominant banks in Canada have C$225bn (US$220bn) in debt maturing by 2015. Even though financial conditions in Canada continue to improve, the central bank concludes that the risks to the country’s financial stability have increased. Should concerns over sovereign debt spiral into a renewed financial crisis, Canada’s banks would likely find themselves insulated but not immune.

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In a recent speech, Bank of Canada governor Mark Carney gave an unusually frank—for a central banker—assessment of the global regulatory response to the financial crisis. He spoke of a financial system “awash in moral hazard” and “giving way to hubris.”

In the recent past, financiers could be forgiven for discounting such talk as the musings of a small fish in a big pond. But given that Canada’s financial system has weathered the storm better than most of its rich-country peers—thanks largely to tough regulation—Mr Carney’s ideas deserve the world’s attention.

Read more at Financial Services Briefing: “Talking tough” (November 2nd)