By way of Socratic provocation, I asked John McKenzie, overseer of Canada’s main public capital markets, what we’d have to do to become a proper global financial centre. The CEO of TMX Group didn’t love the premise. “I think we already have a lot of it,” he said. “A capital markets ecosystem [with] secure banking, with great controls around it—we’ve got a lot of great assets already.” 

Maybe we do. But since the prime minister has challenged Canadians to “live in truth,” let’s consider whether we’re making the most of those assets.

Last year, four Bay Street trade associations, including the Canadian arm of the Alternative Investment Management Association and CFA Societies Canada, banded together to sound an alarm over the dwindling number of up-and-coming professional investors. An industry that lacks new entrants is a stagnant one. Toronto ranks only 21st on the Global Financial Centres Index, behind less-than-obvious nodes in the global financial system such as Dublin and Washington, D.C., and banking hubs in non-G7 democracies such as Luxembourg, Seoul, Zurich and Geneva.

Why care? Canada needs new sources of growth to offset the fragility of the manufacturing industry, which now lives at the mercy of U.S. President Donald Trump. We could do that by chasing the next big thing—artificial intelligence, quantum computing, electric vehicles—and hope that something catches a spark. The trouble with that strategy is that everyone else is chasing it, too. The federal government, Ontario and Quebec went all-in on EVs. Maybe their luck will turn, but it’s not looking good. 

But there’s a way to improve our odds at choosing some winners amid this moment of peril. We could go easy on moonshots and instead use most of our scarce resources to amplify what we already do well. I assume that’s one of the reasons Prime Minister Mark Carney’s industrial policy is mostly about heavy industry. Any dynamic economy should be testing the knowledge frontier, but this isn’t 2015, when new prime minister Justin Trudeau had the luxury of relative global stability when dreaming up the superclusters and the Strategic Innovation Fund to finance big bets on the future. Canada urgently needs to build economic resiliency and Carney inherited a credit card that was maxed out. His bets have to be safer ones.  

Last year, I argued that the food industry could be Canada’s calling card—if the various sectors within it could get over their jealousies of one another and if governments embraced its potential. Finance looks like another industry that has grown comfortable being good rather than great. The home of six ridiculously profitable banks, the Maple 8 pension funds and the stock exchange that listed the first exchange-traded fund should be more than a middling player in global finance. The rewards and spinoff benefits from helping to manage the world’s wealth are too large to settle for good when great is within easy reach. 

The Competition Bureau’s investigation of lending to smaller companies suggests that could be literally true. The legacy banks show all the signs of a mature, concentrated industry that lacks incentives to take risk. A year ago, TD Insurance became the first Canadian insurer to sponsor a catastrophe bond to hedge against natural disasters in Canada. I was impressed until I read that the U.S. market for “cat bonds” was already worth some US$15 billion and the first one was issued there in 1996. A dynamic financial centre probably shouldn’t need three decades to innovate. I’m reminded of something Minto Group CEO Michael Waters said about Canada’s chronic lack of home construction: one of the multitude of causes is a lack of creativity on Bay Street. 

“To pioneer and innovate and come up with a new instrument when there is no demand for it, or uncertain demand, is typically not their M.O.,” Waters told me in 2024, envying the menu of financing options available to U.S. homebuilders. 

It’s easy to explain away Canada’s middling rank in global finance. Seven of the places in the Global Financial Centres Index’s top 10 are in the U.S. or China, the world’s most dominant economies by considerable margins. History or a looser commitment to transparency explain many of the others that outrank Canada. Dublin surely benefits from Ireland’s commitment to corporate tax rates that are lower than anything a Canadian politician would dare legislate.

Maybe there are ways to get more out of Bay Street. More competitive pressure would help. The U.S. and China have a bunch of internationally significant financial centres because they are massive economies, but also because each is hypercompetitive. Financial technology companies such as Wealthsimple and Koho have gotten the oligopoly’s attention without much help from Ottawa, and Carney appears willing to provide a boost by taking open banking rules seriously. Carney’s budget also promised a $1-billion fund that venture capitalists can tap, stating specifically that some of the money will be used to support “new and emerging fund managers,” suggesting that someone in Ottawa agrees that Bay Street would benefit from some new entrants. 

What else? Let’s bring McKenzie back into this. He can take umbrage with a question about Bay Street’s shortcomings because things look pretty good from where he sits. The capital markets he oversees rival Paris and London when measured by the value of securities listed on them. The S&P/TSX index of the biggest Canadian stocks rose 28 per cent last year, compared with the S&P 500’s 16 per cent increase. “The pipeline for new issues is the strongest we’ve had in a long time,” he said last month. That “doesn’t mean they will go,” he clarified, but “they are getting ready. They’re doing the filings. They are testing the market.” 

But he was open to the possibility that we could do better. One issue is marketing. “When you sit next to the U.S., a massive market, there are people who move money there just as a proxy,” McKenzie said. That means you have to try harder just to stay in the game—and then harder still to win some hands. This is where governments can help. 

There are limits to the amount of money that even the cleverest bankers can magic from existing financial flows. McKenzie insists that if Bay Street isn’t all it could be, then that’s because a labyrinth of regulation and a punitive tax code mean it’s easier for international investors to make money elsewhere. “You have to have good things to invest in,” he said. “Maybe build some pipelines [for example]. Let’s open our minds.” 

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.