Canadian Banks on Borrowed Time: Will Policy Makers Act Before It Is Too Late?

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Source: Canada Needs To Prepare For Bank Runs & Collapses, Warns Former Regulator

Canada’s Banking System Faces Growing Risks Beneath the Surface

Canada’s banking institutions have long enjoyed a reputation for resilience, but as history repeatedly shows, even the strongest systems can fail when warning signs are ignored. Financial risk builds quietly beneath the surface, only to erupt when least expected. Now, there are calls for policymakers to update Canada’s financial safety net, ensuring it is ready to address systemic shocks before they emerge. A failure to act could leave depositors and investors vulnerable to disruptions reverberating across the economy.

Risk Happens Fast, Even in the Strongest Financial Systems

Canada’s financial institutions have been among the most trusted in the world. However, recent events highlight that no system is immune to collapse. In the past few years, the world has witnessed sudden failures that shook global financial markets. The unexpected collapse of Silicon Valley Bank and the shock merger of Credit Suisse with UBS remind us that financial risks can materialize within days, if not hours. Canada’s banks might feel far removed from such events, but interconnected markets ensure foreign failures eventually reach Canadian shores.

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With the country's policymakers slow to modernize their approach to bank oversight, Canada risks being unprepared for a fast-moving financial crisis. Current stability can breed complacency, and without intervention, there is a real danger of Canada experiencing the same kind of destabilizing failures that have blindsided other financial hubs. In finance, the risk is never absent. It only lies dormant until it erupts.

Inaction Could Threaten Public Confidence and the Economy

Canada’s strong banking reputation rests on outdated assumptions. As markets grow more interconnected, foreign economic stress can spill into Canada without warning. Current oversight mechanisms were designed in an era when economic cycles moved slower. Today, crises move at unprecedented speeds, forcing regulators to react in real time, often too late to prevent damage.

Despite no major failures since the 1990s, the financial system's success has led to stagnation in policy reform. For example, the Canada Deposit Insurance Corporation (CDIC) protects depositors with coverage of up to $100,000 per account. Yet this coverage lags far behind the U.S. Federal Deposit Insurance Corporation (FDIC), which insures deposits up to $344,000 CAD. The lack of parity leaves Canadians more exposed during a financial emergency. With deposit insurance remaining untested for over 25 years, there is no way to gauge whether reimbursement timelines will hold in a crisis involving multiple institutions.

The Real Risk: Bank Failures and Bailouts

Bank mergers are often used as a first response to prevent failure, but this strategy has limits. In a concentrated banking market like Canada’s, a single failure can cascade into broader systemic risks, with few institutions able to absorb distressed assets. If multiple failures occur simultaneously, merging banks might no longer be viable, and taxpayers could be forced to shoulder the financial burden through bailouts.

To mitigate this, policymakers must modernize liquidity facilities. Currently, banks hesitate to access emergency funds from the Bank of Canada (BoC) out of fear that such actions will signal distress to the market. Regulatory reforms that encourage earlier use of liquidity tools without triggering market panic could be a vital safeguard.

Signs of Stress Are Already Emerging

Despite the perception of stability, there are signs that cracks are forming in the financial system. The BoC recently increased short-term liquidity access and reclassified certain debts, raising concerns about hidden risks. While central bankers downplay these moves as routine, the rapid pace of policy shifts suggests underlying pressures that are not being disclosed fully. Liquidity challenges have already surfaced in at least one financial institution, hinting that the system might be weaker than it appears.

At the same time, Canada’s bank regulator, OSFI, has softened its stance on tightening lending standards, further complicating the regulatory landscape. The delay in adopting global risk standards, such as reclassifying investor mortgages as higher-risk assets, raises questions about whether Canada is prepared to handle a downturn.

A Defensive Wealth Strategy: It Starts With Gold

In light of these risks, a sound strategy for investors involves strengthening their portfolios with tangible, reliable assets that can withstand market turmoil. Gold stands out as a critical component in this strategy, offering a stable foundation for wealth preservation.

The Stability and Reliability of Gold

Gold’s intrinsic value makes it an essential cornerstone for a well-diversified portfolio. During economic uncertainty, inflationary pressures, or institutional failures, gold maintains its worth, providing a secure store of value. Unlike paper assets vulnerable to market swings or securities entitlements exposed to systemic risks, gold offers investors a tangible asset that is resilient during financial crises.

Portfolio Insurance with Gold

Gold acts as portfolio insurance by offsetting losses from volatile stocks, bonds, or other paper assets. During downturns, gold’s value often increases or remains stable, creating a hedge against sudden market fluctuations. This ability to preserve wealth makes it indispensable for investors looking to manage risk effectively. Those interested in safeguarding their wealth through precious metals can explore physical gold purchasing options by contacting New World Precious Metals .

It Starts With Gold

A Primer on Why Gold is the Foundation for Every Portfolio

I am writing a book about gold with my co-author, Peter J. Merrick, TEP , titled It Starts With Gold. This is not just another book on gold. It is a definitive guide on why gold must be the foundation of any portfolio designed to manage risk, shield against market volatility, and protect from inflation and potential market collapse. Gold is the only asset class that has consistently preserved wealth over time, making it an indispensable asset in today’s uncertain financial climate.

Email me at [email protected] to be the first to receive notice when it is published.

Enhancing Portfolio Diversification with Private Real Estate

Combining Gold with investments in private real estate, such as multifamily rental apartments, can further enhance portfolio diversification. This approach not only safeguards wealth but also taps into the growing demand for rental properties driven by immigration and demographic changes. Private real estate investments provide a steady income stream and the potential for capital appreciation, offering a complementary asset class to Gold's stability.

Partnering for Holistic Wealth Management

For investors looking to de-risk their wealth, partnering with a dedicated wealth management team provides access to sophisticated strategies traditionally reserved for the ultra-affluent. As a dedicated advocate for de-risking business, family and multi-generational wealth, I am partnered with one of Canada's leading independent private wealth management firms. My team serves high-net-worth clients nationwide. We provide professional investment management and comprehensive wealth planning solutions from a fiducially focused, client-first perspective. We provide access to sophisticated tax-advantaged strategies and solutions.

Capital Preservation: A Priority

We are driven by a "capital preservation first" philosophy. Our team generates consistent, tax-efficient returns uncorrelated to public markets. By leveraging our expertise, you are granted access to key industry professionals, gaining exclusive entrance into alternative investments such as private equity, private real estate, precious metals, commodities, government-sanctioned flow-through tax-efficient structures, and tax-minimizing corporate insurance solutions offered through mutual life companies. All are designed to fortify, secure and de-risk your family, business and estate assets against financial risk, economic threats, inflation and higher taxes.

To receive a complimentary digital copy of "Who's Investing Your Money?," email me at [email protected] or book a complementary portfolio evaluation with me through my Calendly Link.

A Call to Action: Protect and Fortify Your Wealth

With financial risks on the horizon, taking proactive steps to diversify with gold, private real estate, and alternative investments is essential. As a reader, I invite you to explore these solutions through a complimentary portfolio evaluation. During this consultation, we will assess your current investments and explore how alternative assets can protect your portfolio from financial institution risks, inflation, and tax increases.

To book your consultation, email me at [email protected] or use my Calendly Link.

The Custodial Model: An Extra Layer of Protection

Further enhancing security, we adopt a custodial model, ensuring client assets are held by an independent third-party custodian and not commingled with the firm’s holdings. This segregation reduces the risk of asset seizure or misappropriation during a financial crisis, providing peace of mind for investors concerned about institutional insolvency. This model aligns with insights from David Rodgers Webb's book, The Great Taking , emphasizing the importance of separating assets to shield against potential financial institution risks.

Watch The Great Taking Documentary

Additional Resources:

• The Great Taking PDF
• The Great Taking - Documentary
• The Great Taking Download
• The Great Taking (Audio Book) by David Webb

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Disclaimer

The information provided is for educational purposes only and does not constitute financial, investment, legal, real estate, estate planning, wealth planning, financial planning, tax planning, insurance, or any other financial-related advice. It should not be viewed as a recommendation to buy, sell, or hold any financial products or assets. All investments, including stocks, bonds, private equity, private real estate, alternative assets, and precious metals, carry inherent risks, including loss of principal. Markets are unpredictable, and past performance does not guarantee future results. Diversification may reduce risk but does not ensure protection against loss. Real estate and precious metals are subject to market volatility, economic conditions, and illiquidity. Alternative investments, such as private equity, private real estate, and private debt, often involve complex legal structures, longer time horizons, and higher risk, requiring careful consideration and professional advice. Insurance, estate planning, wealth planning, real estate, and tax planning decisions, as well as any financial strategies, must be tailored to the unique circumstances, goals, and risk tolerance of each individual. Tax and legal implications vary by person and jurisdiction, and changes in laws can affect outcomes. It is crucial to consult with licensed financial, legal, tax, insurance, real estate, and mortgage professionals before making decisions. Forward-looking predictions are the opinion of the author and do not constitute financial advice. By using this information, you acknowledge it is general in nature and not a substitute for personalized advice, and you agree that the authors and affiliated entities are not liable for any financial losses or consequences from reliance on the content provided.

References

1. CREA Cuts Housing Market Forecast
2. Your private asset allocation may have proved its worth last week

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