Bank of Canada Governor Mark Carney said on Wednesday that Canadian and other major government bond markets should be exempt from the Volcker Rule, a sentiment shared by many foreign banks.
The Volcker Rule, which prohibits financial institutions from engaging in speculative, risky investments that do not benefit customers, will apply to domestic banks, as well as U.S. subsidiaries of foreign banks, Reuters reports.
Both U.K. and Japanese financial institutions have warned against the Volcker Rule and its potential effect on foreign banks, mutual funds and economies.
Carney expressed concern that the restrictions extend beyond American banks to possibly affect the business of foreign banks who have U.S.-based customers and dealings.
"And we think that is at best inconsistent and quite probably unwise," Carney said, according to Reuters.
These restrictions on market-making or proprietary trades could have unintended consequences, critics argue.
"We've had some discussions. We'll have more with our U.S. colleagues about it," Carney said, Reuters reports. "This all happens in a long spirit of mutual cooperation between Canadian authorities and U.S. authorities, so I'd be confident that where this ends up will be good for both the U.S., for Canada and the global system."