While the Bank of Canada acted promptly and aggressively to provide liquidity to keep financial markets functioning, no banks had to be rescued and house prices didn’t plunge. This is not to say we were lily pure. In fact, in 2007, a specialized Canadian market collapsed – the market for non-banksponsored asset-backed commercial paper (ABCP).
It was only through timely and forceful action by the public and private sectors that this situation was resolved without generating wider fallout. Nevertheless, the recession in Canada was painful. This was mainly because our exports collapsed.