The Bank of Canada’s model, ToTEM, is capable of capturing such shifts, in theory, but model respecifications need to be based on reliable empirical work, which is not extensive. For the present, it may have to suffice for policy-makers to acknowledge the risks posed by shifts in integration and consider how to insulate policy decisions from those risks.
The amendment also would remove the parallel provision that allows states to impose a minimum requirement on the age of banks that are acquired by an out-of-state banking organization. These changes would allow banks, including in particular small banks near state borders, to better serve their customers by establishing new interstate branches and acquiring newly chartered banks across state lines.