In terms of the U.S. financial institutions, as I think you may be aware, the Federal Reserve, in conjunction with the regulators, conducted a thorough stress test of the 19 largest institutions in the United States earlier this year, and that revealed capital requirements consistent with a further severe recession between now and the end of 2010. Those institutions have all now been recapitalized, and in many cases more than recapitalized, so that they have more capital than was required under SCAP, the supervisory capital assessment program. These institutions represent more than 80% of the banking assets in the United States. So to Mr. Pacetti's question earlier, we will see a series of smaller institutions with difficulties, but this is the core of the U.S. system.
That said, it is the view of G-7 governors and regulators that there is an opportunity now for global institutions outside Canada, where profitability is returned to the sector, to further build capital buffers in order to provide the necessary credit for the economy, and there is a view that institutions should take that into account when considering returns to shareholders and setting compensation, given the global outlook. That applies equally to the United States, as it does elsewhere.
In terms of the short- and longer-term prospects for the United States, history has shown—and generally we make reference to this in the report—that countries that have been affected by financial crises often see a reduction in their potential growth and it takes a long time to bring themselves back. So the absolute level of the economy, the capacity of the economy, is reduced, and then in terms of the speed with which they can return, it takes some time to get back. There are certainly elements of that in the United States, and that is one of many reasons we see what is for the United States a substandard recovery. We detail that in a chart, actually, on page 10 of the report, which shows all the historic recoveries since the Great Depression in the United States, and this will be weaker.
Longer-term potential of the United States is still in the hands of the inventiveness and resources of the American people. It's down to decisions of government, the central bank to a lesser extent, because these are longer-term decisions, and of individuals there, but it's something we're all going to have to watch.
The final point I would make is that it is our view that this crisis is a watershed in many respects, in that there will be an adjustment of demand in the United States, less consumption, and more outwardly focused net exports, and more of global growth will come from major emerging markets than our historic markets. So from a medium-term perspective, Canadian businesses are well advised to seek out those markets and develop those ties.