By Erik Hertzberg
(Bloomberg) — The Bank of Canada’s second in command called the country’s banking system an “oligopoly,” using the sector as a key example of how limited competition is restricting growth.
Speaking in Toronto on Thursday, Senior Deputy Governor Carolyn Rogers said the lack of business competition in Canada is a major reason for the country’s sluggish productivity growth and investment. She pointed to a concentration of market power in the country’s financial system.
“It would also be hard to argue, on any objective measure, that Canada’s banking system is anything other than an oligopoly,” she said, noting the country’s six biggest lenders hold over 90% of all banking assets, and are more profitable than their peers in many other advanced countries.
“Many argue that this level of concentration has clear negative impacts on productivity, innovation, capital allocation, cost and consumer choice,” she said.
Rogers, who has also held a senior regulator role at the Office of the Superintendent of Financial Institutions, said the concentration in the financial sector has offered some stability for Canadians, but has harmed productivity.
More new entrants and more innovation would lead to competition that’s good for consumers, and as the world enters a period of economic nationalism, Canada should resist the urge to add more protections, she said.
“The balance between stability and competition in the financial sector is part of the debate about how to get underperforming economies back into growth mode,” she said.
Real-time rail, which would modernize payments by facilitating instant money transfers, is set to launch at the end of 2026 and will help boost competition in the sector, Rogers argues, by allowing more firms access to the payments system. She pointed to a study by the C.D. Howe institute that estimated efficiency gains of $3 billion.
She also urged the successful implementation of open banking, which grants individuals control over their own financial data as another way to add to competition and encourage new entrants to the financial sector.
It’s not the first speech where Rogers has offered a major critique of Canada’s economy — at the beginning of 2024 she called Canada’s productivity weakness an “emergency” situation. The trade war has only added to that urgency, she said.
“I think this government is focused,” Rogers said when asked about ways to improve the country’s ailing productivity in a question-and-answer session following her speech. She also pointed to “big investments.”
Prime Minister Mark Carney and Finance Minister Francois-Philippe Champagne will unveil a budget on Nov. 4, and economists expect the deficit to swell to as much as 3% of Canada’s gross domestic product as the federal government aims to boost military and housing spending and fast track large infrastructure projects.
“Productivity and economic growth is a shared responsibility. It’s the public sector and the private sector,” Rogers said.
In the speech, Rogers said competition disciplines firms, encourages innovation, and leads to reallocation of resources to more efficient and productive use.
“If a market is highly concentrated, dominant firms may have the resources to invest but lack the incentive to do so.”
At the same time, the senior deputy governor acknowledged that too much competition can also be problematic, causing market “distortions and disruptions” as new market entrants add pressure to “established business models.”
In some markets like education and health care, Rogers said open competition may not “deliver the societal outcomes we want.” That makes finding the right policy balance tricky, she said.
“An economy with too little competition will lag in innovation and efficiency and struggle to attract investment. An economy with too much competition can also have under-investment and is more likely to experience instability and market failures.”
–With assistance from Melissa Shin and Derek Decloet.
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Last modified: October 9, 2025