Presenting the most pitifully capitalized central bank in the West [Hint: It’s NOT the Fed]

En route to South America
As the world’s top central bankers gathered at their annual jamboree recently, the governor of Bank of Canada, Stephen Poloz, undoubtedly received envious comments from his fellow money magicians for Canada’s perceived status as a global financial safe haven.
This newly found perception was perhaps best exemplified during a Bloomberg interview, when the CEO of RBC Wealth Management – the biggest financial institution in Canada said that ‘Canada is what Switzerland was 20 years ago, and the banks in Canada are what Swiss banks were 20 years ago.’
This is the new flavor of Kool-Aid. Canada is seen as the new banking safe haven and an ‘island of safety and stability’ because of its perceived sound fiscal position, commodity wealth and solid economic performance.
Now, anytime I see central bankers slapping each other on the back, I’m going to be skeptical. But here at Sovereign Man, our conclusions are all data driven… so we dove into the numbers.
First, the Big Daddy himself – Canada’s central bank.
Any strong, healthy banking system requires a central bank with a pristine balance sheet… specifically, substantial net equity as a percentage of assets.
So how strong is the balance sheet for Banque du Canada?

This post was published at Sovereign Man on September 2, 2014.

 

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