So far, Canada’s banks seem to have fared will in the financial crisis. Unlike in the United States, they are few and relatively forcefully regulated. The current Wikipedia article on Canada’s banks is generous with praise: “Banking in Canada is widely considered the most efficient and safest banking system in the world, ranking as the world’s soundest banking system according to a 2008 World Economic Forum report.” It’s possible that this is a fundamentally superior form of financial regulation. At the same time, it’s possible that this crisis just wasn’t the sort that would test the viability of the big Canadian banks, and that another crisis could.
Given the extreme difficulty of dealing with banks too big to fail, should Canada break up the big banks that exist presently? Would doing so increase the security of the financial system, or diminish it? Also, if Canadian banks should be broken up, when should it be done?