Canadian Economy Nowadays - Article Example

Running Head: Canadian Economy Canadian Economy [Institute’s Canadian Economy Since few decades, globalization has played a significant role in almost every sector of the human society that inclined most of the states to create their policies while considering global issues. In addition, recent wave of economic recession has affected most of the sectors, especially business and economic sectors that are still endeavoring to cope with the effects of economic recession. Canada is one of the developed countries that are some of the major victims of economic global downfall; however, studies have indicated that Canadian government has been efficient in dealing with different economic issues due to their effective counter policies. On the other hand, some experts have argued that Canadian government and the Bank of Canada has showed ineptitude and incompetence in terms of running the Canadian economy, and since few years, they have indicated a rapid downfall in its performance, worst in comparison with majority of G7 countries (Thiessen, 1999). In specific, this paper will attempt to discuss and analyze different aspects of the Canadian economy while identifying and recognizing the role of Canadian government and the Bank of Canada in handling different aspects of the economy while evaluating the macro-economic policies of the Canadian government over the last two years (NRCC, 2009). Wall Street, one of the most credible sources of studies related to the financial sector of global arena, has indicated that it is very imperative that governments should focus on creating economic policies that emphasize and advocate cooperation of public and private stakeholders on global level. This aspect has been very evident in the efforts of Canadian government since few years, as analysis of the information related to Canadian economy specified that its government focused on creating their plans that are relevant with global resolutions rather than individual requirements. This is one of the major factors of success of Canadian economy in the past few years, as compared with the American economy that confronted greater impact from the wave of economic recession. Another important factor identified during the research is successful banking sector that enabled the economy to keep on performing while confronting impact of the recession. While comparing Canadian banks with American or European banks, they have played a better role in dealing with the economic global storm, and experts have noted that private sector has been very efficient in practicing effectual management policies based on dogmatic supervision of the financial sector. Besides the private sector, macroeconomic structure of the Canadian economy has been very significant in providing a positive and productive environment to the Canadian banking sector. In this regard, studies have indicated that all such factors of the Canadian economy and the significant role of Canadian government have enabled the country to lead and escort the G7 countries on a global level. This is one of the reasons that today, a number of developing and even developed countries are attempting to follow structure of the Canadian banking system and use it as a blueprint (NRCC, 2009). Consistency is another important characteristic of policymakers of Canada that have continued to create effective macroeconomic policies in an unfailing and long-lasting manner. In addition, the Canadian government was one of the pioneers in the consideration of policies for inflating targeting that have been very beneficial for economy of the country. One of the examples of its consistency is its inflation rate that has been under two percent since a decade. Moreover, economists have indicated presence of a sturdy regulatory policy in its financial sector, and the banking sector is responsible to report every finding and every step to the Federal stakeholders (NRCC, 2009). In other words, Federal legislation is the major governing body in Canada, and in every half decade, it takes essential steps to renovate and repair the banking sector according to its requirements. This is one of the most efficient qualities of the Canadian government and the Bank of Canada that it analyzes the present market while considering the economic prospects, and carry out steps to regulate the financial sector accordingly. In this regard, the government of Canada has been very successful in running the Canadian economy since many years. For more than two decades, the government has continued to handle all the investment dealers on one platform through banks that own them, and thus, this central management system in Canada has resulted in elimination of various barriers confronted by other countries and economies globally. In specific, this management role of regulating financial institutions and organizations of the country is responsibility of the OSFI. Thus, although Canada has a private banking sector, but central regulatory structure and effective monetary policies have allowed the economy to perform profitably globally (Rajasekaran, pp. 1-11, 2009). One of the examples of higher performance and ambitious prospects of Canadian government and its banking sector is target of 7% percent of Tier 1 capital by OSFI, whereas the required percentage is only four by Basel II (NRCC, 2009). Such an ambitious targeting policy of the Canadian government has facilitated the country to lead the G7 countries on a global level. Canadian economists have indicated that unlike other countries, Canadian government always focused on consistent amount of assets along with sound capital, rather than using ‘creation and distribution’ model practiced by other countries and economies in different parts of the world. Thus, the Canadian government’s approach of keeping consistency has been a crucial factor in successful Canadian economy (NRCC, 2009). All such factors have resulted in the placing of most of the Canadian banks in top ranking on global level. Analysis of the information related to Canadian economy and Canadian banking sector, it is an observation that Canadian government has always accepted presence of open and free economic markets in the country (NRCC, 2009); however, has been strict and rigid in keeping a balance in its education and healthcare systems, a significant quality of its economic system. In other words, its promotion of free market economy has allowed private investors to increase their trust in the country, but at the same time, its rigidity and consistency has enabled the government to practice good governance in the country. Such a hopeful and positive perspective of economists about Canadian economic system and effective role of the government and the banking sector is another important factor that has facilitated the government to run the economy in a successful manner. In August 2009, findings of a study indicated more than 85% of consumer trust over Canadian government and its economy, one of the highest rates in the last two years. This shows effective economic policies of the Canadian government. In June 2009, a survey (Tait, pp. FP.4, 2009) attempted to identify the perspective of investors in Canada regarding future prospects of Canadian economy, and results showed 20% of the investors as hopeful. Interestingly, this percent increased by nine percent in just two months, and additionally, only fifteen percent of investors expected severe economic confrontations during the next year that indicates deeper relationship of Canadian government and the Bank of Canada with foreign and domestic investors, sign of efficient economic policy of the Canadian government (Tait, pp. FP.4, 2009). As the paper earlier conversed about Wall Street’s suggestion of creating economic policies in relevancy with global economic solutions, the Bank of Canada has been practicing and advocating similar perspective. On February 10, 2009, Governor of the Bank of Canada (Akin, pp. D.1, 2009) indicated his similar viewpoint about economic reform, and conversed that Canadian economy can cope with the effects of global recession by directing its economic policies toward reformation and recovery of world’s economy while talking to members of the Parliament (Akin, pp. A.11, 2009). The Governor recommended them to consider this viewpoint as the foremost requisite while creating economic policies on national and regional level. During this meeting, he said, "Stabilization of the global financial system is a precondition for economic recovery globally and in Canada" (Akin, pp. A.11, 2009). Analysis of the findings has specified that new financial plans of the Bank of Canada, as well as the Canadian government have been in the same direction to stay relevant with global economic reform (Rajasekaran, pp. 1-11, 2009). While comparing Canadian plans with U.S. financial policies, it is an understanding that USA has planned to establish a state-supported bank that will facilitate private banks in taking off ‘toxic assets’ from their sheets. On the other hand, the Bank of Canada has endeavored to fix and eliminate the factors that are causing credit crisis on global level, rather than putting efforts in eliminating so-called toxic assets. This significant distinction between American and Canadian economic policies has been very beneficial for Canadian economy to perform successfully on a region, national, as well as global level (Canada’s Economic Action Plan, 2009). Lastly, the Canadian government and the Bank of Canada are focusing on another major objective since couple of years: improvement of regulatory structures on national and international level with the help of G20 states in a collective manner. Experts noted that the Canadian government has played a significant role in using a sensible approach on macro, as well as micro level of the economy. In addition, transparency is another major focus of the Canadian government, essential for providing sufficient resources to the IMF. In this regard, experts have noted a rapid increment in lucidity, as well as accountability in the economic, and most importantly, banking sector of the country since couple of years (HRSD Canada, 2009). Conclusively, the paper has discussed some of the significant aspects of the Canadian economy and attempted to recognize role of the Canadian government and the Bank of Canada in running economy in a successful manner. It is an expectation that the paper will be beneficial for students, teachers, and professionals in better understanding of the topic. References Akin, David. (2009). “Financial system reform key.” The Ottawa Citizen. Issue of February 11, 2009, pp. D.1. Akin, David. (2009). “Monetary reform a must.” Nanaimo Daily News. Issue of February 11, 2009, pp. A. 11. Canada’s Economic Action Plan. (2009). The Report. Retrieved on October 26, 2009: http://www.actionplan.gc.ca/eng/feature.asp?pageId=105 HRSD Canada. (2009). “Government of Canada helping Canadians prepare for the Economy of the future.” Canadian Business Online. Retrieved on October 26, 2009: http://www.canadianbusiness.com/markets/marketwire/article.jsp?content=20091024_111503_0_ccn_ccn NRCC. (2009). National Research Council Canada. Retrieved on October 26, 2009: http://www.nrc-cnrc.gc.ca/eng/index.html Rajasekaran, Vinod. (2009). “Rebooting the Economy: What is the role of government in the transforming economy?” Public Policy Forum. Retrieved on October 26, 2009: http://www.ppforum.com/publications/rebooting-economy-what-role-government-transforming-economy Tait, Carrie. (2009). “Canadians show their best outlook of economy in two years.” National Post. Issue of September 05, 2009, pp. FP. 4. Thiessen, Gordon. (1999). “Speech on the Canadian economy.” Bank of Canada. Retrieved on October 26, 2009: http://www.bankofcanada.ca/en/speeches/1997/sp97-5.html Read More