While Canadians bask in the praise of foreign policymakers who laud our prudent financial regulation, we should probably also take note of international criticism, according to the Canadian representative to the International Monetary Fund.

The IMF has repeatedly expressed concern over Canada’s apparent refusal to adopt a single national securities regulator, according to Tom Hockin, executive director at the IMF, representing Canada, Ireland and the Caribbean.

“I’m not here to be an expert on the new legislation; I’m an outsider looking in,” Hockin said, speaking to a lunchtime audience at the Economic Club of Canada, in Toronto. “International perspective really matters.”

That international perspective is the federal initiative toward a national regulator means that “Canada is finally catching up with the rest of the world,” he said. At present, it is the only country in the G20 that does not have a national securities regulator, and is possibly the only stand out in the entire IMF, with its 186 members.

“Financial stability is the prism through which the IMF views the world,” he said. And the lack of a national regulator leads the IMF to question our ability to respond to a crisis.

“My colleagues at the IMF ask me ‘why can’t you get this done?'” Hockin said. “And I don’t really have a good answer, except provincial parochial attitudes.”

The hope of a single regulator “builds confidence in Canadian capital markets,” he said. “When they see a big hole like this, they back off.”

The global financial crisis of 2008 demonstrated how systemic risk can sink an entire country, Hockin said. With 13 separate regulators, Canada lacks the agility to be able to deal with systemic, nation-wide problems.

He pointed to the 2007 crisis in non-bank asset-backed commercial paper as an example of Canada’s regulatory failure. When the ABCP market seized up, market participants did not go running to their provincial regulators, he pointed out. They went to Ottawa.

It was the federal government that brought together the Bank of Canada, OSFI, and the provincial regulators to craft a solution to the crisis. To this day, he said, the provincial regulators have yet to co-ordinate a response that would ensure against such a crisis happening again.

Regardless of what the international community thinks of our balkanized regulatory regime, Hockin says a single regulatory would ensure that all Canadian investors were playing under the same rules, and free regulators from never-ending harmonization efforts.

“It is a test of our commitment to a ‘big Canada’,” Hockin said. “We need to replace the narrow parochial view with something better for Canada.”