Sell MintChip and fast!: National Post Op-Ed
Published in the National Post on April 9th, 2014
By Mati Dubrovinsky
There is no reason for an agency of the government of Canada to be further involved in developing or marketing electronic payments technologies
A few days ago, the Wall Street Journal reported that an electronic payments system, MintChip – until now under development by the Royal Canadian Mint – is on the block, for sale to private investors.That is a fine idea, because there is little reason for the federal government to deliver directly an electronic payments system.
The Royal Canadian Mint – this country’s issuer of all circulation and commemorative coins –has been developing an electronic payments system dubbed “MintChip.” The…
A better Basel mousetrap to protect taxpayers: Financial Post Op-Ed
Published in the Financial Post on March 4, 2014
By Finn Poschmann
Ottawa is soon to release proposals on bank bail-ins, the process by which bank bondholders, who seem always to get bailed out when banks get into trouble, instead might be bailed-in, becoming shareholders. The idea is to avoid government bailouts of institutions that are thought too big to fail and to limit the damage to third or fourth parties if they fail anyway.
Bail-in debt may come to exist alongside, or even displace, debt now being issued in accordance with the Basel banking committee guidelines, known in banking circles as Basel III-compliant non-viability contingent capital, NVCC. Bail-in debt and NVCC serve similar, perhaps…
Shareholder Liability: A New (Old) Way of Thinking about Financial Regulation
In the wake of a series of crises, international and domestic financial regulation has become highly complex and prescriptive, but doesn’t address the fundamental issues behind the crises, according to a report released today by the C.D. Howe Institute. In “Shareholder Liability: A New (Old) Way of Thinking about Financial Regulation,” author Finn Poschmann finds […] High Frequency Traders: Angels or Devils?
High frequency trading is not the bane of capital markets that critics make it out to be, according to a report released today by the C.D. Howe Institute. In “High Frequency Traders: Angels or Devils?” author Jeffrey G. MacIntosh weighs the effects of lightening fast, automated trading on capital markets and finds that, overall, it […] Housing moves: Canada, U.S. contemplate changes to the way we finance housing: Financial Post Op-Ed
Published in the Financial Post on October 2, 2013
By Finn Poschmann
Last Wednesday Scotiabank sold the first Canadian bonds backed by consumer lines of credit in 12 years. The highly rated issue sold at market, according to a Bloomberg report, at an impressive 78 basis points over similar-term Canadian government bonds.
Critics may worry that such events signal a continuing explosion in household debt and a return of the boom and bust “wild West,” U.S.-style marketplace.
But there is another way to see it. The bonds’ risks will be borne by the issuer and investors, not unwilling and unknowing taxpayers, who back most of the mortgage risk in Canadian and U.S. housing markets.
And change is afoot in the…
Killing off zombie companies: Financial Post Op-Ed
Published in the Financial Post on August 26, 2013
By Finn Poschmann
Japan’s tedious waking dream, the one where the economy drags in the doldrums for decades, introduced the world to the notion of zombie companies.
Japanese zombie companies marched ever onward, pretending to have profitable business plans, propped up by bank loans extended by financial institutions that pretended to be solvent, their lending in turn being prodded along by regulators who pretended not to be corrupt. Today, Japan’s Prime Minister Abe, while keeping them walking for now, is hoping to bring businesses back to real life by forcing the Bank of Japan to rain monetary stimulus on them. The idea just might work.
But keeping…
Rickety housing markets: Financial Post Op-Ed
Published in the Financial Post on August 9, 2013
By Finn Poschmann
Business headlines flowed fast this week: Regulatory limits on government-backed mortgage security issuance kicked in and ruffled markets in Canada, and President Obama endorsed a Senate bill that would overturn housing finance mechanisms in the United States.
The U.S. first. The current in the U.S. represents fundamental reform proposals, in response to the housing bust there that Canada has, so far, avoided. Fannie Mae, Freddie Mac, and a flood of other federal agencies with funny nicknames, lend, insure and securitize trillions of dollars of home loans, and Congress and the President would like to change the system before they are…
The Dangers of an Extended Period of Low Interest Rates: Why the Bank of Canada Should Start Raising Them Now
After an extended period of record-low interest rates, the Bank of Canada should reverse some monetary stimulus and begin raising interest rates, according to economist Paul Masson. In “The Dangers of an Extended Period of Low Interest Rates: Why the Bank of Canada Should Start Raising Them Now,” published by the C.D. Howe Institute, Masson […] Indalex ruling captures balancing act of bankruptcy law: Globe and Mail Op-Ed
Published in the Globe and Mail on February 3, 2013
By Finn Poschmann
Bankruptcy laws can be strict or loose. Strict jurisdictions impose onerous and long repayment requirements on debtors. Others set debtors free relatively quickly. Too strict, and you stifle entrepreneurship and productive risk-taking. Too loose – or worse, too uncertain – and capital becomes harder to borrow, with the same bad economic outcome.
Setting bankruptcy law and policy is a legislature’s job. And when conflicts and uncertainty arise, such as between federal bankruptcy law and provincial pension law, figuring out how a legislature might have intended to resolve them is the court’s job.
That’s what makes the Supreme Court of Canada’…
Seeking Financial Stability: The Best Role for the Bank of Canada
Ottawa must move carefully in deciding the best role for the Bank of Canada in preventing threats to financial stability, according to a report released today by the C.D. Howe Institute. In “Seeking Financial Stability: The Best Role for the Bank of Canada,” former Bank of Canada Governor John Crow assesses how much of a […] More RRBs Please! Why Ottawa Should Issue More Inflation-Indexed Bonds
Ottawa should issue more real-return bonds (RRBs) to satisfy investor demand and lower its borrowing costs, among other benefits, according to a report released today by the C.D. Howe Institute. In “More RRBs Please! Why Ottawa Should Issue More Inflation-Indexed Bonds,” Philippe Bergevin and William B.P. Robson argue that Canada’s federal government, which began issuing […] Can Venture Capital Foster Innovation in Canada? Yes, but Certain Types of Venture Capital Are Better than Others
Venture capital funding for business in Canada is strongly linked to innovation, as measured by new patent applications, according to a report released today by the C.D. Howe Institute. In “Can Venture Capital Foster Innovation in Canada? Yes, but Certain Types of Venture Capital Are Better than Others,” author Tariq Fancy finds Canadian venture capital […]