Moody’s downgrades Senegal to Caa1 amid rising debt concerns
Investing.com -- Bank of Canada Senior Deputy Governor Carolyn Rogers emphasized the urgent need to improve Canada’s productivity through increased competition, particularly in the financial sector, during a speech Thursday.
Rogers highlighted that Canada’s productivity challenges have become more pressing amid U.S. trade policy shifts and persistent affordability concerns for Canadians, despite inflation returning to the central bank’s 1%-3% target range for the past 18 months.
"Higher productivity won’t make Canada immune to US trade policy, but it would help buffer the effects of tariffs. And it’s the clearest path to boosting real wages, making life more affordable," Rogers stated.
The deputy governor focused on competition as a key driver of productivity, explaining that it works through multiple channels: disciplining firms to reduce inefficiencies, encouraging innovation, and reallocating resources to their most productive uses.
Rogers pointed to Canada’s banking sector as a prime example where competition improvements could yield economy-wide benefits. She noted the sector’s high concentration, with six largest banks holding approximately 93% of all banking assets.
"It would be hard to argue, on any objective measure, that Canada’s banking system is anything other than an oligopoly," Rogers said, while acknowledging this concentration has contributed to stability.
Two upcoming initiatives were highlighted as potential competition boosters: Real-Time Rail and open banking. The Real-Time Rail system, expected to launch late next year, will allow instant money transfers and provide more firms with direct access to the payments system. A C.D. Howe Institute study estimated it could deliver over $3 billion in efficiency gains to Canada’s economy in its first five years.
Meanwhile, open banking would shift control of financial data from banks to consumers, making it easier to compare and switch between financial institutions. Rogers noted that 69% of Canadians haven’t switched their primary bank in the past decade, and 29% have never switched bank accounts.
"As the world heads into a period of greater economic nationalism and more industrial policy, we need to resist the urge to add protections. Instead, we should look for ways to encourage more innovation and greater competition," Rogers concluded.