We have witnessed banks cooperating only reluctantly in criminal investigations, and we have seen interest groups rejecting outright any attempt to reform remuneration in the banking sector. Regaining trust will not be easy. Bank managers must convince the public that they will reward socially beneficial behaviour, while unacceptable behaviour will be credibly sanctioned, up to the top.
Further, our interests in financial stability cut across the Bank of Canada’s functions – not only do we need a well-functioning financial system to transmit our monetary policy, but we also have oversight of systemically important financial market infrastructures and, of course, we are the lender of last resort to the system.