There has been an earlier discussion of why Canada didn’t suffer a banking crisis. The Financial Times asked the same question in its January 30/31 issue. The answers provided by the FT may not satisfy all, but here they are: Old-fashioned prudential regulation is singled out: capital requirements, quality of capital and leverage ratios. Other major Western countries, particularly the US, were all relaxing them while Canada was tightening them. The regulators worked in tandem and there were no regulatory gaps to exploit.
Additionally, bank regulation in Canada is principles-based, rather than rules-based. That obviates legalistic circumvention of safety-and-soundness regulations. “The message in the US is it’s your responsibility to meet our rules. In Canada, the responsibility is to run the institution right.”
Finally, there were no trendy innovations in the mortgage market, and securitization was much less common.
In other words, banking and supervision done the old-fashioned way: safety first.