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Canadian Economy at Pre-Recession Levels: Central Banker

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The Canadian financial system is “firing on all cylinders,” Mark Carney, the head of Canada’s central bank, the Bank of Canada, told CNBC Friday.

“We’re in a different situation than in the United States,” said Carney, who is the “Ben Bernanke” of Canada.

Unlike the rest of the G7 countries, Canada is the only one to raise interest rate: On September 8, it upped its rate ¼ of a percent, to 1 percent.

“Our economy is back to the pre-recession peak, both in output and employment.”

Carney said what happens in the United Statesis naturally a major concern to Canada, as the country is the America's largest trading partner and it's a predominant destination for Canada's exports.

Concerning trade with China, Carney joined the US in pushing for more flexibility on currency. Although Carney had earlier praised China's moves, he backtracked Friday.

"We expect China to increase the flexibility of its currency in due course. People are starting to deliver on fiscal responsibility," he said. "We just got the Basel accord through. Currency flexibility, up until now, has been a slogan, not a reality."

The central banker said Canada was able to weather the recession storm better than the US, due to two regulatory aspects in place.

“The first is capital. We had higher capital, we had real equity,” he said. “Related to that, we had an absolute limit on leverage. Forget about all the fancy risk-weighting, we had a very simple leverage test on our institutions.”

Carney said another worry is that Canadians are borrowing too much these days. The household borrowing is one of the reasons the central bank raised interest rates earlier this month.