OTTAWA (Reuters) - Canada stepped up pressure on Washington on Monday to rewrite its controversial Volcker rule to remove restrictions on Canadian bank activities that it says do not threaten the U.S. financial system.
Bank of Canada Governor Mark Carney, who is also chairman of the Financial Stability Board, a global watchdog set up by the Group of 20 nations, and Finance Minister Jim Flaherty laid out their complaints about the rule, included in the 2010 Dodd-Frank financial oversight law, in letters to their U.S. counterparts.
Canada's banks are so interconnected with U.S. financial system that the law's ban on proprietary trading would rob the Canadian government bond market of needed liquidity and hamper bank-sponsored hedge funds unnecessarily, they argued.
The draft rule targets activities that actually help strengthen Canada's financial system, they said.
"The Volcker rule as drafted would also potentially apply to Canadian banks' much larger Canadian
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