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Banks tower above pedestrians in Toronto’s financial district.Kevin Van Paassen

Finance Minister Jim Flaherty appears to be rethinking the merits of boring.

In the aftermath of the financial crisis, Mr. Flaherty, in locales ranging from Washington to Istanbul, extoled the virtues of Canada's "boring" banking system.

With the global financial system resembling an emergency ward, there was keen interest in Canada's approach to finance, as the country's banks survived the tsunami with barely a nick. I've lost count of how many seminars, panel discussions and conferences I attended in Washington circa 2010 and 2011 on the theme of how Wall Street might benefit from some northern exposure.

Washington's interest in Canada's banking policies has trickled out recently. That could be because American policy makers took a look and decided the Canadian approach had less to offer than might have been expected.

Sheila Bair, the former head of the Federal Deposit Insurance Corp., told me over breakfast at the end of last year that Canada holds few lessons for the United States when it comes to banking. She praised the regulatory culture, noting that Bay Street appears to have less influence in Ottawa than does Wall Street in Washington.

But Ms. Bair was disparaging of the lack of competition in countries such as Canada and Australia. "We have a more innovative system and I think those other countries are able to draw from that," she said. "If everyone follows a system of four or five big banks that are tightly regulated and controlled by the government, I don't know if that works."

Mr. Flaherty's 2013 budget suggests he's become less enthralled with the boring banking model. The document lays out a path that, if successful, would create a financial system that more closely resembles that of – yes – the United States.

The Canadian Bankers Association insists Canada's financial system is extremely competitive. Mr. Flaherty apparently has become unconvinced, as he used the budget to announce a regulatory review to "ensure that it promotes the entry and growth of smaller institutions, while preserving the safety and soundness of the sector." One of the reasons the U.S. crushes Canada in productivity measures is because its entrepreneurs and small business have easier access to capital. The country has thousands of community banks and regional banks that must lend locally or they make no money. Mr. Flaherty's regulatory review suggests he wants to ensure that Ottawa isn't the reason a similar system doesn't exist in Canada.

There's also evidence in the budget that Mr. Flaherty would like the biggest banks to adopt some of the swagger of American institutions such as JPMorgan Chase & Co. and Goldman Sachs Group Inc.

Any rational economic actor will seek profit the easiest way possible. Canada's banks, quite reasonably, have been doing so by distributing home loans that almost entirely are insured by the federal government. The budget proposes making that business less lucrative by restricting the use of bulk mortgage insurance, which financial institutions had begun using to help satisfy new capital requirements.

One assumes the leaders of Canada's banks still are driven by greed. Mr. Flaherty is forcing them to seek more innovative ways to make a profit than dolling out government-backed mortgages. And in case Canada's bankers are at a loss at how that might be done, Mr. Flaherty through the budget drops a suggestion: continue to expand abroad.

"As part of the government's efforts to intensify Canada's pursuit of new and deeper trade relationships, it will partner with financial institutions to promote the Canadian brand with key decision makers in foreign markets," the budget stays. "Strategic expansion of Canadian financial institutions internationally will create skilled financial sector jobs in Canada and allow the industry to increase its contribution to the Canadian economy."

Mr. Flaherty went further, saying the government will propose rule changes that would allow banks and insurers to put more non-Canadians on their boards of directors. If Canadian financial institutions are to confront new markets, they ought to be able to draw on the expertise of men and women who know how to do it.

Of course, none of this may come to pass. The ability of Canadian financial institutions to compete abroad will depend a great deal on the outcome of trade agreements with Europe and Asia. And Mr. Flaherty's attempt to stoke domestic competition in financial services will test Ms. Bair's observation that Canada's politicians are immune from pressure from the banking industry.

Still, the budget's proposals for the financial industry signal a shift in the relationship between Ottawa and Bay Street. Boring is good in a crisis. But the financial crisis, as far as Canada is concerned, has passed. The new challenge for policy makers is economic growth. For that, a financial system that is a little less dull will be required.