[written by Paul Weinberg, courtesy of pej.org]

Toronto's Bay Street represents the epicentre of the Canadian finance industry. Credit:Michael Swan/CC BY 2.0

Potential storms are on the horizon for much praised, regulated and privately-owned Canadian banks which survived the 2008 financial meltdown unscathed, unlike some of their larger counterparts in the United States.

During the crisis, Canada was given the thumbs up for having the soundest banking system in a survey of corporate executives by the World Economic Forum.

Nevertheless, the interrelated nature of the international banking system makes Canadian banks, valued at 6.3 trillion dollars in total, still vulnerable, says David MacDonald, a senior economist at the Canadian Centre for Policy Alternatives in Ottawa.

“The Canadian banks aren’t exposed directly to the European sovereign debt crisis. (But) the effect that they would feel would be (serious) if other banks they did business with suddenly went under or if confidence in the wholesale banking markets suffered, then it would be harder for Canadian banks to get liquidity,” MacDonald told IPS.