The first Canadian bank – the Bank of Montreal was established in 1817, and this marked the beginning of the modern Canadian banking system. In the following years many new financial institutions opened for business. These new banks were issuing their own banknotes. The amendment done to the British North America Act in 1866, allowed both provincial and local governments to issue notes. The banknotes issued by the private Canadian banks were phased out, once the Canadian dollar was introduced in 1871. In 1935 the Canada established its own central bank, the Bank of Canada.

The Canadian financial markets are dominated by the “Big Five” Canadian banks: RBC, TD Bank, Sctoiabank, CIBC and BMO. There are many other smaller banks, however their market share is insignificant. Combined the Canadian banks have over 8,000 bank branches worldwide.

There are two primary regulators of the Canadian banking system: the Financial Consumer Agency of Canada, dealing with consumer issues, and the Office of the Superintendent of Financial Issues which focuses mainly on regulation. The Bank Act of Canada is reviewed every five years to make sure that the regulatory system is updated with regard to changes in the banking industry. In an effort to deal with the global financial crisis, the government began to monitor closely the banks’ capital. The banks had to raise capital in case that their capital was below the stipulated capital requirements. Furthermore, various international organizations, among which the International Monetary Fund, consider that Canada has a sound and well functioning regulatory system.

The Canadian banking system is also regarded as one of the safest banking systems around the world. Unlike other nations, Canadians did not have to bail out their banking institutions. In general, banks seem to be more stable in comparison to US and European banks. For instance, Toronto Dominion Bank was the fifteenth largest bank on the North American continent in 2007. In 2008, the bank became the fifth largest. The Bank of Nova Scotia continues to expand its operations during the last couple of years. The bank was successful in acquiring the Chilean Banco de Desarollo in 2007 and some additional 20 percent of Scotiabank Peru in 2008. In 2009, Scotiabank completed the acquisition of E*Trade Financial Group and acquired a majority interest in the asset management entity Five Continents Financial Ltd.

The majority of Canadians consider that good management is in place with regard to their banking system. They are confident that deposits are kept safe and make use of reasonably priced credit options.

The Canadian banking industry stability is not just something that economists around the world made up, but is supported by various statistics. The “Big Five” Canadian banks are one of the top employers in the country, employing over 250,000 Canadians. The banks also contribute to the economic growth by providing much-needed credit to hundreds of thousands of small and medium Canadian businesses.

Want to know more about investing, then check www.canadabanks.net. If you need a mortgage, check their mortgage calculator.