Banking Crisis Looming in Canada Google images labeled for reuse

Canada, China, and Hong Kong have all made the list for the countries who are at the highest risk for experiencing a banking crisis, according to early indicators set forth by the Bank for International Settlements.

Growing Economy

Although the Canadian economy grew last year, Canada made the list because of the levels of high debt in the country as well as the amount of Canadians who have maxed out credit cards. Hong Kong and China also made the list because of high levels of household borrowing.

Banking Crisis

One of the ways the risk of a banking crisis is determined by the Bank for International Settlements is to study the difference the GDP/credit ratio. A large difference is typically the first single that a financial bust is looming.

2015

Since being put on the list in 2015, China has been very proactive in making sure that they work on getting off the list, and it seems to be working. In less than a year China’s gap fell almost 17 percent and is currently at the latest it has been since 2012. The country has cracked down on stock market speculation, shadow banking and slowing the growth of interbank borrows and management products.

“It will take care of itself”

While other countries, like China, are doing everything they can to get off the list, and in turn making lives better for all of their citizens, Canada seems to be doing very little.

It is no surprise that Justin Trudeau once again said “It will take care of itself” in regards to the huge deficit Canada currently has, and still climbing.

In order for Canada to get their financial situation under control, Trudeau will have to start thinking about the deficit and not just hope that it will magically fix itself. That is not how economies work, and as the prime minister, he should know that.

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