Office of the Superintendent of Financial Institutions
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The current global economic environment remains far from normal. Interest rates are still at historically low levels and growth in several advanced economies is still not at pre-crisis levels. While the Canadian financial system continues to benefit from approaches taken in Canada, OSFI and domestic banks and insurance companies need to avoid complacency.
In 2013-14, OSFI introduced or finalized several guidelines intended to promote and maintain confidence in Canada’s financial system. These included: Liquidity Adequacy Requirements that reflect internationally agreed minimum standards for the measurement of short-term liquidity under a stress scenario; Own Risk and Solvency Assessment and Regulatory Capital and Internal Capital Targets to strengthen the insurance industry’s enterprise-wide risk management process; and, a Guideline on Mortgage Insurance Underwriting as a follow-up to the Guideline on Residential Mortgage Underwriting Practices and Procedures issued in 2012.
In 2013, Canada was subject to an International Monetary Fund (IMF) Financial Sector Assessment Program (FSAP) review. The FSAP report identified OSFI’s close touch supervision, our clear and straightforward mandate, and our ability to attract and retain financial sector specialists as some of the factors that helped Canada withstand the crisis well.
The FSAP team noted that stress tests OSFI conducted in 2013 show that major financial institutions would continue to be resilient to credit, liquidity, and contagion risks arising from a severe stress scenario.
OSFI also looked inward, to strengthen our high-performing and effective workforce by providing more focus on teams responsible for managing domestic systemically important banks, while at the same time designating an employee to focus on the requirements of the smaller banks under OSFI’s purview.
Strong cooperation and communication with our federal partners, such as the Bank of Canada, the Department of Finance, Canada Deposit Insurance Corporation and the Financial Consumer Agency of Canada, was also a contributing factor in allowing OSFI to meet its goals in 2013-14.
This was my final year as Superintendent of Financial Institutions. During my tenure the world has gone through one of its most difficult financial crises, the effects of which are still being felt today. I am proud of the way OSFI and our federal partners pulled together to work our way through the numerous challenges that were presented.
The contribution to public confidence in the Canadian financial system that OSFI has been able to make comes down – as always – to the individual contributions of our employees. It has been an honour and pleasure to work with them these past seven years. I know that my successor, and all Canadians, will be able to count on the ongoing dedication and professionalism of OSFI’s people.