Should regulators back away from imposing new rules on the banks so that lending can offer the economy a lift? Julie Dickson, the head of Canada's banking regulator, says no way.
She's aware of the U.S. Chamber of Commerce-sponsored campaign called "This Way to Jobs," which argues that more regulation will impede growth.
But speaking to a risk conference in Geneva on Wednesday, she said categorically that "banking regulation and supervision are critical and should not be watered down to achieve other objectives...
"While economic growth is the ultimate driver of almost everything, including the health of banks, robust bank regulation and supervision are prerequisites for long term growth and stability," she said. "These should not be traded for short-term benefits."
Rather than fretting about the economic recovery, Ms. Dickson and her fellow regulators are spending their time ensuring that the new rules will actually do what they're intended to do.
She characterizes Basel III, the new regulations governing banks' capital levels, as a positive development, but acknowledges that it might not stand the test of time. It all depends on how banks respond to it.
"Their responses could be positive as intended, or negative, in the form of taking on higher risk business or spending less on risk management controls in order to pump up return on equity," she said.