The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
This Selected Issues paper on Canada examines economic development and policies. Capital ratios before the crisis have been a key determinant of bank performance during the turmoil; and Canadian banks had ample capital. Specifically, most banks with critically low capital at end-2006 later experienced dramatic equity value declines, and many had to be rescued. Regulatory and structural factors contributed to the resilience of Canadian banks by reducing their incentives to take risks.