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Mark Carney, Governor of the Bank of Canada, holds a press conference to discuss the contents of the Monetary Policy Report at the National Press Theatre in Ottawa on Wednesday, October 26, 2011.Sean Kilpatrick

The Financial Stability Board, the global body tasked with co-ordinating the overhaul of international banking rules, is poised to act as more of a "policeman" to make sure governments make good on their promises to implement reforms, Bank of Canada Governor Mark Carney said.

Mr. Carney, who is expected to be named FSB Chairman at the Group of 20 leaders' summit next week in Cannes, said in an interview with CBC which aired Thursday, that the financial system is safer now than it was three years ago, but added the push to toughen rules and make the system more resilient has a long way to go. G20 leaders are expected to give the FSB, which has little true authority to enforce its will, some more clout next week – and possibly its own budget – so it can properly monitor whether beefed-up rules are actually being implemented by national governments.

"The decisions that are taken in Cannes at the end of next week will ratify a bunch of things that the FSB has been working and set an agenda, a forward agenda, for the FSB,'' Mr. Carney said in an interview with CBC's Amanda Lang. "What will that agenda likely be? Part of it will be, in fairness, a policeman role -- making sure that everybody implements what they've already agreed to do."

The FSB, based in Basel, Switzerland, will soon attempt to regulate the so-called shadow banking sector, Mr. Carney said, so risky behaviour that might threaten the world financial system doesn't fly under the radar.

"A lot of risk can come out of it that has to be tackled, and that's what we're here to work on," Mr. Carney said of the "shadow" banking sector, which includes non-bank financial-industry participants like money market funds. "We've focused on the regulated side, we've got to work on the entire unregulated side."

The central banker, interviewed in New York on Wednesday before European leaders struck their latest attempt to contain the euro-zone debt crisis, also said there was little chance of a massive funding squeeze that puts big banks out of business like the one that caused Lehman Brothers to collapse in 2008. Unlike Lehman, which effectively lost access to cash, the European banking system has a combined 4-trillion euros of "unencumbered assets" that they can use to access cash from the European Central Bank if necessary, he said.

"The worst-case scenario, the Lehman-type scenario, has been removed," he said. "I would stress though, there's a difference between containment and resolution. Containment is a much lower bar."

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