Reasonable Credit in Canada: An Attempt to Avoid Over-Indebtedness

Abstract

Consumer indebtedness may lead to meltdown, for the consumer and the financial system more generally. Overly generous access to credit and consumer indebtedness have been identified as one important reason for the 2007–2009 financial crisis. Admittedly, Canada passed through this crisis without any serious problems. However, growing indebtedness among Canadian households, fuelled mainly by increasing over-consumption and low interest rates in recent years, remains a continuing problem for the Canadian financial system. Facing the concerns of the Superintendent of Financial Institutions, recent steps have been taken by the Canadian and provincial regulators to address this issue. Unfortunately, despite these measures, reasonable credit, and hence, sustainable consumption of credit, has yet to emerge.