While comprehensive financial reforms agreed to by the G20, the world’s biggest industrialized economies, will go "a long way" toward restoring public confidence in banks since the 2008 financial crisis, they won't be sufficient, Bank of Canada governor Mark Carney said today.

"Over the past year, the questions of competence have been supplanted by questions of conduct," Carney said in a speech at Western University in London, Ont.

"Several major foreign banks and their employees have been charged with criminal activity, including the manipulation of financial benchmarks, such as LIBOR, money-laundering, unlawful foreclosure and the unauthorized use of client funds," he said.

"These abuses have raised fundamental doubts about the core values of financial institutions."

Carney's comments were being closely watched amid continuing weakness in the loonie, which slipped further against the U.S. greenback Monday amid concerns about softness in the Canadian economy and possible border delays caused by a budget deadlock in the U.S.

The Canadian dollar was down for the seventh straight day, closing down 0.65 of a cent at 97.31 cents US, and continuing to trade near eight-month lows.

There has been a "significant" loss of public trust in the financial system, Carney said, based on a growing suspicion about the benefits of looser government regulation and easier flows of capital across global borders, "a suspicion that could ultimately undermine support for free trade and open markets more generally."

The G20 has implemented several measures to shore up its banks, including reserving at least seven times as much cash on their balance sheets as before the crisis, and accounting rules that make clearer what the risks are that assets could fall in value.

"It remains the collective responsibility of banks, regulators and other stakeholders to rebuild trust in banking," Carney said.

"Banks need to participate actively in reform, not fight it. Until recently, too few bankers acknowledged their industry’s role in the fiasco. The time for remorse is far from over."

At a news conference after his speech, Carney said evidence of a slowing in housing market activity was "welcome," as a sign that Canadian homeowners are reining in their high debt levels, but that as that trend continues, businesses must increase their investment levels, to keep economic activity healthy.

Asked about the recent fall in the loonie, Carney said a lower dollar has advantages, such as encouraging businesses to import new equipment which can be used to increase productivity.

But, at the same time, that the Bank of Canada would not pursue a strategy of trying to push the dollar lower because "you don’t depreciate your way to prosperity."

The loonie has fallen by about 2.5 US cents over February on a combination of factors.

These include sliding commodities, worries about the strength of the Canadian housing sector and the price differential between benchmark Brent crude and Western Canadian Select from the oilsands.

Traders are also concerned about U.S. economic strength, particularly as a March 1 deadline looms when more than $85 billion US in across the board spending cuts will be triggered, something referred to as sequestration.

That’s being closed watched by the Canadian Manufacturers & Exporters, which fears the effects could be "immediate and damaging" for cross-border commerce, with longer border delays and lost business opportunities.

Border delays possible

The budget cuts could affect the U.S. Customs and Border Protection agency, which has already announced plans to reduce its workforce by roughly 2,750 inspectors.

The CME expects that could increase border wait times by up to five hours at larger ports of entry.

Similar cuts would affect the U.S. Department of Agriculture and the Food and Drug Administration.

"This gridlock in Washington has a spillover effect for our members," says CME chief executive Jayson Myers.

"Canada and the United States enjoy the most integrated economic relationship of any two countries in the world. Every day that passes without an agreement brings us one step closer to an unnecessary crisis – a turning point that will not only affect Canadian companies, but our American business partners as well."

CME also fears sequestration could jeopardize the rollout of measures to increase efficiency on cross-border movement of goods, referred to as the Beyond the Border Action Plan, now in the second year of a two-year implementation.

Also affecting the loonie is strength in the U.S. dollar, which grew last week amid concerns the U.S. Federal Reserve may abandon its easy monetary policy sooner than many analysts have been predicting.

Parity could be far off

Finally, the loonie was hit at the end of last week, as lower-than-expected retail sales for December pointed to a weakening economy while tame inflation figures indicated the Bank of Canada won't be raising rates any time soon.

Economists think it could be some time before the loonie resumes its perch above parity with the greenback.

"In light of the recent weakness, persistently soft data and lacklustre economic outlook, we've downgraded our call on the dollar, with the currency now expected to strengthen at a more subdued pace over the next year ending 2013 at parity," said BMO Capital Markets senior economist Benjamin Reitzes.

This week, the major piece of economic data comes out Friday.

Statistics Canada is widely expected to report that Canadian gross domestic product grew by 0.7 per cent in the fourth quarter. But it looks like growth started to flatten at the end of the year as the economy likely contracted by 0.1 per cent in December after rising 0.3 per cent in November.

Traders also looked to the eurozone on the final day of a general election in Italy that has proven to be closer than many thought.

Italy has the second-highest level of debt among the 17 eurozone countries as a proportion of its annual gross domestic product. Only Greece's is higher.

And analysts say the concern is that difficulties hammering together another coalition government could seriously hamper progress on financial reforms.