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The near collapse of the financial system has sparked a global debate on reform; a debate that should be focused on the international monetary structure, according to Bank of Canada governor Mark Carney.

The world needs to promote an open monetary system, which would promote economic growth and prosperity, he said today in New York. Speaking to the Foreign Policy Association, he used the forum to argue against artificial controls on currency valuations.

“In a world of global capital, all systemically important countries and common economic areas should move towards market-based exchange rates,” he said. “The common lesson of the gold standard, the Bretton Woods system, and the current hybrid system is that it is the adjustment mechanism, not the choice of reserve asset, that ultimately matters.”

The financial crisis was partly caused by global current account imbalances, which were exacerbated by artificially undervalued currencies, such as the Chinese yuan.

Carney suggested greater use of the International Monetary Fund’s Special Drawing Rights, which might be best suited to encouraging more flexible exchange rates for all systemically important countries.

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BMO hailed for forex excellence

BMO Capital Markets has been named the Best Bank for the Canadian Dollar by FX Week Magazine. It is the first time the bank has won the honour, which is determined by votes from foreign exchange market professionals around the world.

“We are honoured to be recognized by FX Week as the No. 1 dealer for the Canadian dollar globally,” said Jamie Thorsen, global head of foreign exchange products at BMO Capital Markets. “Our goal is to continue to build long-term sustainable client relationships and provide a unique perspective that offers a differentiated depth of expertise in the Canadian dollar. We are all about helping our clients turn currency risk into reward.”

Nearly 7,000 respondents participated in this year’s survey, representing banks, corporate treasurers fund managers, institutional investors and hedge funds.

In September, BMO Capital Markets was named the best foreign exchange bank in Canada by European CEO Magazine.

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Pension funds back Toronto action plan

The three largest pension funds in Canada are throwing their support behind a new action plan to remake Toronto as a global hub for the retirement financial sector.

The chief executives from Ontario Teachers’ Pension Plan, Canada Pension Plan Investment Board (CPPIB) and the Ontario Municipal Employees Retirement System (OMERS) are backing the Toronto Financial Services Working Group’s plan to make the Toronto region one of the two leading financial clusters in North America.

Jim Leech (Teachers’), David Denison (CPPIB) and Michael Nobrega (OMERS) have signed a statement of support of the coalition’s new report, Partnership and Action: Mobilizing Toronto’s Financial Sector for Global Action.

Paid for by the Toronto Financial Services Working Group — a coalition of banks, insurers, pension funds, investment firms, and government — as well as Boston Consulting, the report predicts that a successful strategy could result in as many as 40,000 new jobs and add $5 billion to GDP over the next five years.

Among the recommendations is the establishment a global risk-management institute in Toronto to capitalize on the city’s existing talent pool.

“Toronto is developing into a world centre of retirement financing excellence — where talent, expertise and motivation intersect,” the pension funds said in a statement. “It is home to three of the country’s — and indeed the world’s — largest and most sophisticated and innovative pension funds.”

The working group will “spur Toronto’s critical mass of retirement financing expertise towards more growth and attract experts from around the world, fuelling the local economy and working towards the shared goal of financial stability for all,” reads the statement.

(11/20/09)