While the risk of a bank failure in Canada isn't zero, many of the circumstances that led to the collapse of Silicon Valley Bank don't apply in the Canadian banking sector.
The world economy continues to feel the ripple effects after U.S. authorities took over Silicon Valley Bank last Friday.
"No bank is immune to a bank run," Western University's Cristián Bravo, who is the Canada Research Chair in banking and insurance analytics, told CTVNews.ca over the phone Tuesday. "If everyone goes to the bank and tries to withdraw their money, that is going to cause a collapse." SVB, facing a lack of liquidity, announced last Wednesday that it had sold off these investments at a loss and needed to raise capital to fill a massive hole in its balance sheet.
"Canada’s banks are well-capitalized with robust capital ratios, have diversified business models and funding sources, and must meet rigorous liquidity standards set by federal regulators," the association said. "The Canadian banking system is widely recognized for its prudent lending and risk management practices, diligent government oversight, and sensible regulation based on the core tenets of safety and soundness.
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