No, absolutely not.
However, that is why we have our system. In fact, it is a long-standing tradition in Canada to conduct mandatory five-year reviews of Canada's financial sector legislation. I should point out that this most recent review process was officially launched in September 2010, when our Conservative government launched the public consultation process open to all Canadians.
I am sure most members of the House are familiar with the World Economic Forum, which has ranked Canada as having the soundest banks in the world for four years running. What is more, Canada's safe and secure financial system is the envy of the world.
I will quote from the United States Congressional Research Service report which explains how Canadian banks offer a model to the United States and other countries on how to avoid a future financial market crisis. It states:
Canada’s financial system, in particular, garnered attention, because it seemed to be more resistant to the failures and bailouts that have marked banks in the United States and Europe...
As my hon. colleagues are no doubt aware, Canada's credit unions offer important and valuable services as part of our banking sector. Indeed, more than five million Canadians and business owners are the grassroot shareholders of co-operative financial services in Canada and one in three Canadians is a member of a credit union or caisse populaire.
In recent years, our Conservative government has demonstrated its commitment to credit unions by supporting a federal credit union charter to accommodate growth and expansion of the Canadian credit union system. These actions will ensure that those credit unions, which choose to pursue business ventures out of the province, will not be constrained by outdated rules on provincial incorporation. Furthermore, this will also give credit unions a means of diversifying sources of funding and spreading their geographic risk exposure. Similarly, in order to provide federal credit unions with a greater leverage of the Canadian Payments Association, today's legislation would amend the Canadian Payments Act so that credit unions would be classified under the co-operative class in the act instead of the bank class.
At the same time, credit unions will still employ the long-standing, well-understood and robust governance, liquidity, clearing and settlement frameworks in use today. While this may sound like nothing more than a technical change, it is nevertheless fundamentally important. This change would continue to promote a level playing field within the financial sector which would foster competition among players and would ensure a stronger, more stable overall system.
This is what the Credit Union Central of Canada, the national association for credit unions of Canada, had to say about this modification. It said:
—we want to note our support for the proposed amendments...Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system representation at the CPA. It will ensure that a federal credit union will be represented by a director, who speaks for the interests of cooperative financial institutions in CPA matters. A strong advocate at the CPA is important for the credit union system's ability to advocate on behalf of credit unions and to continue to operate payments facility efficiently and cost effectively, which has a direct impact on overall credit union system competitiveness.
I will remind everybody that CPA is the Canadian Payments Act.
I am certain all members of the House would be in agreement that a stronger credit union system can benefit all Canadians.
Finally, as I mentioned at the outset of my remarks, I would like to speak to a piece of the financial system review act that would make improvements to Canada's payments system, something Canadians deal with almost each and every day. Indeed, every year, Canadians make 24 billion payments, which in total are worth more than $44 trillion. These payments allow us to run our businesses, sustain our households and allow governments to fund essential programs.
Canadians use various payments instruments to purchase goods and services to make financial investments and to transfer funds from one person to another. These instruments include cash, cheques, debit and credit cards. With the exception of cash, payment instruments have typically necessitated a claim on a financial institution such as a bank, credit union or caisse populaire. Therefore, banks and credit unions must make arrangements to transfer funds among themselves, either on their own or on their customer's behalf.
A payments system is set on instruments, procedures and rules used to transfer these funds. In Canada our national systems for clearing and settlement of payments are run by the Canadian Payments Association, or the CPA, a not-for-profit organization of federally regulated financial institutions.
Our government knows that no modern economy can reliably function without a payments system that is sophisticated and secure. However, the payments landscape is changing. For example, experience in Canada and abroad since the 1990s demonstrates that clearing and settlement systems do not always include banks as direct participants. That is why Bill S-5 seeks to amend the Payment Clearing and Settlement Act to remove the requirement that there must be at least one bank involved in a payments transaction. These new rules will allow more flexibility in establishing systems to clear complex financial instruments like over the counter derivatives, or OTCs. This adjustment will permit the Bank of Canada to monitor payments that could pose systemic risks to the financial system.
Canada's leadership in reforming the global financial system through membership and international organizations, such as the G20, is well-known and a source of pride for Canadians. What Canadians may not know is that one important commitment we have made to our G20 partners is that all our OTCs will be cleared through central counter parties by 2012. This is an important step for the resilience and stability of our financial system.
To meet our G20 commitments, it is critical that Canadian prudential and market conduct regulators have the necessary authority, tools and information to regulate the Canadian OTC derivatives market on an ongoing basis. This means coordinating activities across current federal and provincial jurisdictions as well as with foreign regulators.
This is the kind of evolutionary change that demonstrates the importance of regular reviews in our legislative framework to maintain Canada's leadership in financial services. For these reasons, I urge the members to support passage of this largely technical but immensely important bill, which would help to ensure the continued functioning of Canada's payments system.