. an important reason canada fared better than other countries was that our financial system was more robust. canada ’ s banking system was rated “ the soundest in the world ” by the banker magazine three years in a row, from 2008 to 2010. no canadian financial institutions failed – or had to be rescued by taxpayers – during the crisis. leading up to the crisis, our banks were less leveraged, less dependent on wholesale financing, and less exposed to the structured financial products that brought down some of their peers in other countries. this in turn reflected, at least in part, canada ’ s tougher regulatory standards and stricter supervision and oversight. canada ’ s established policy framework and strong fiscal position gave the authorities considerable room for manoeuvre when the crisis struck. these strengths, in turn, bis central bankers ’ speeches were the legacy of the harsh lessons canada learned during the 1980s and 1990s from failures of two small banks and our own sovereign debt problem. nonetheless, canada ’ s financial stability came under stress during the crisis. serious risks materialized, and had to be countered by timely and aggressive policy action. liquidity conditions in canada ’ s core funding markets – although not as extreme as in other jurisdictions – became very tight : in the climate of fear following the failure of lehman brothers, many canadian institutions had difficulty obtaining funding ( chart 2 ). in response, the bank of canada provided substantial short - term liquidity support to the financial system : we made this support available to a broader group of institutions, for longer terms, and against a wider range of collateral than under normal conditions. during this period, the canadian government also provided longer - term funding to canadian banks to prevent a severe credit crunch in the private sector ( chart 3 ). 1 as a result of these actions, canada ’ s core funding markets stayed open, and credit kept flowing to the private sector ( chart 4 ). as the global crisis gave way to the great recession, canada ’ s economy suffered the consequences – mainly through a collapse in exports to the united states, which was in a deep recession. canada lost output amounting to more than 4 per cent of real gdp and job losses equivalent to almost 2 1 / 2 per cent of our labour force. but an aggressive policy response helped to prevent a worse outcome. the bank of canada eased policy substantially in order to achieve its 2 per cent inflation target : it lowered the overnight policy rate to its lowest possible level ( 1 / 4 per cent ) and took the unconventional

global cooperation. new standards agreed upon at the international level must be implemented at the national level. as we move past the policy - development phase, processes are being put in place to monitor implementation, including cross - country peer reviews of specific standards by the financial stability board. domestic reform initiatives are equally important, but need to be harmonized in an integrated world. if conflicts and inconsistencies arise from the requirements of different jurisdictions, these initiatives may not succeed in establishing a safer global financial system. financial stability is necessary for sustainable economic growth. but it ’ s a public good : its benefits are widely shared. can it be achieved in one country alone? not a chance. we ’ re all in this together. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches