Economic forecaster warns of bank crisis for advanced economies
Economists are divided on how Canadian banks will weather declining housing prices. While Barclay's suggests banks are diversified enough to manage higher interest rate impacts, Oxford Economics warns Canada could see a bank crisis in the next year. Globally, around 16% of major economies are at risk of a bank crisis by 2026, the forecaster says.
Oxford estimates up to 16 per cent of major economies have an 18 to 20 per cent chance of experiencing a housing crisis within the next three to five years, compared to a historical average of just 2 per cent. The study was conducted using a banking sector risk tool that measures 35 macroeconomic and financial indicators.
Canada is one of five countries with the highest risk of experiencing a banking crisis, with a 7% likelihood in the coming year. Canada, Iceland, the Netherlands, Sweden, and Denmark have an 18% to 20% chance of a bank crisis in the next three to five years.