OTTAWA — Canada has again won the top rating in the world for the soundness of its banking sector, a fundamental strength many credit for the country’s ability to escape the worst of the global recession.
The World Economic Forum rankings released Tuesday places Canada’s banks as the soundest in the world for the second straight year, followed by New Zealand and Australia.
The banking sector is one of the criteria the Geneva-based organization uses to rate countries in terms of overall competitiveness, and was a factor in Switzerland replacing the United States at the top of the overall scale.
Canada moved up to ninth place from 10th last year and from 13th in 2007 for overall competitiveness.
The much-derided U.S. banks were judged 108th soundest, near the bottom of the 133 countries rated.
A spokesman for the Institute for Competitiveness and Prosperity in Toronto says that over the past two years Canada has moved past the United Kingdom, South Korea, Hong Kong and the Netherlands in the rankings.
Finance Minister Jim Flaherty has often referred to the strength of Canada’s banking sector as a key reason the recession, while deep, was still milder in Canada than in many other countries.
Unlike in many western countries, Canada did not experience a bank failure and no government funds were used to prop up the financial sector.
In an interview on British television following the weekend’s G20 meeting, Flaherty said the Canadian banks’ managed to maintain adequate capital reserves throughout the crisis.
“Our banks did not get into a lot of trouble because they were adequately capitalized . . . and they were obliged to maintain that because not only do we regulate but we enforce our regulations.”