"To move to a world that once again values the future, bankers need to see themselves as custodians of their institutions, improving them before they pass them along to their successors," said Bank of Canada governor Mark Carney during a panel discussion Friday at the Toronto Region Board of Trade.
Speaking in front of more than 200 business leaders, Carney said recovery from the 2008 financial crisis has been slow, mainly due to the "fundamental loss of trust" in the global banking system.
It was announced Thursday that Carney, who is leaving for the Bank of England at the end of the month, will be replaced by Export Development Canada chief executive Stephen Poloz.
The discussion Friday also featured Roger Martin, dean of the Rotman School of Management at the University of Toronto, and Convivium editor-in-chief Rev. Raymond De Souza.
Carney said the loss of trust has a real economic consequence.
"It is making the pace of the recovery much harder and the pain of the aftermath that much worse. The real economy relies on the financial system and the financial system itself relies on trust," he said.
The governor said in the years leading up to the financial collapse, the big banks lost their way when they became more about generating profits, rather than helping their clients — the general public.
"Banking is fundamentally about mediation. It's about connecting savers and borrowers in a real economy but the industry developed increasingly as an apex of economic activity as an end of itself," he said. '
"Banks became more about connecting with other banks than connecting with clients. Clients became counterparties and banking became transnational as opposed to relationship-based."
To get back to their "core values," Carney proposed that governments need to strike a balance, to ensure that banks hold enough capital so they won't too vulnerable to failure, but still be open to penalties for misconduct.
Martin said it was the responsibility of business schools to teach those entering that financial sector that they should not just strive for monetary rewards, which can lead to a unethical and "investor-first" industry.
De Souza added that the financial industry should be held to the high moral standards of any industry and rewarding those who practice prudence, honesty, justice and those who do service for others.
"Economic activity isn't separate from the world of ethics and philosophy, mortality and faith, even though sometimes it may seem that way," said De Souza.