Canada's sterling performance during the financial crisis has burnished many reputations. (Yes, we're thinking of you, Mark Carney.) But the reasons for our financial sector's resilience during 2007 and 2008 go beyond the country's good fortune in happening to have a roster of able regulators in place.
According to a recent article in Econ Focus, the economics magazine of the Federal Reserve Bank of Richmond, Canada's relative immunity to the financial contagion that devastated so many U.S. banks is the result of differences between the two countries that go back more than a century. Since 1840, the U.S. has endured 12 banking panics; Canada, zero. Instability has plagued American finance but left this country unscathed.
In "Why was Canada exempt from the financial crisis?", Renee Haltom probes the long-standing contrast between banking in the two countries and asks whether it would be wise for the U.S. to adopt some features of the Canadian model. It's fascinating reading and a useful reminder of the deep divergences that can lurk beneath the surface of two apparently similar countries.