Bank of Canada calls for more cross-border financial integration with U.S.

OTTAWA – The Bank of Canada is calling for more financial integration with the United States as a way to ease cross-border trade and banking.

Deputy governor Lawrence Schembri said Thursday that markets have begun to fragment due to inconsistencies created by the policy reforms that followed the financial crisis — such as the Dodd-Frank Act in the U.S.

In a speech in Windsor, Ont., Schembri said Canada and other jurisdictions have been caught in the middle and now face rising costs to cross-border trade.

He also said new rules in the U.S. have piled legal and administrative costs on Canadian banks with operations on American soil.

“We both have much to gain by strengthening financial integration between our two countries,” he told the Windsor-Essex Regional Chamber of Commerce.

Schembri said the ideal scenario would be the creation of a sweeping agreement between all G20 countries to promote cross-border integration, but he added such a deal could take several years.

Canada and the U.S., he added, should take advantage of their close relationship to hammer out a bilateral agreement to improve co-operation and clarify responsibilities for banks with cross-border operations.

“If any two jurisdictions could achieve such an agreement, it should be Canada and the United States,” Schembri said.

“We could set an example for other countries.”