Canada's banking regulator has put off for another year imposing new capital requirements on the country’s lenders.
Specifically, the Office of the Superintendent of Financial Institutions (OSFI) has delayed a rule change that would bring Canada’s banks into compliance with international banking standards.
The regulator says it needs more time to consider the rule change and how it will impact Canadian banks vis-à-vis other countries.
There have been concerns in Canada's banking sector that OSFI was moving faster than U.S. regulators in implementing the new rules, which could put Canadian banks at a competitive disadvantage.
The rules established by the Basel Committee in Switzerland are meant to standardize international capital requirements and provide for more stability in the global banking sector.
Capital requirements dictate the amount of money that banks must hold in reserve to cover potentially bad loans and meet their obligations in the event of a financial crisis.
The new international standard established by the Basel Committee is being adopted by countries around the world, albeit at different rates of speed.
