Ever since the start of the global financial crisis the government of Canada has boasted about the strength of the country’s banks, gleefully pointing out for five years running that the World Economic Forum has pronounced the Canadian financial system the strongest in the world. It may be strong, but it is not invulnerable. On October 26th, Moody’s, a big ratings agency, said it was reviewing six of the largest Canadian banks with an eye to downgrading their credit ratings.

Two of Moody's big concerns are soaring consumer-debt levels, which a recent revision by Canada's national statistics agency revealed to be worse than had been thought, and high house prices, which paused briefly during the 2008-09 recession before resuming an upward march that has taken some markets into bubble territory. Exposure to what Moody’s called “volatile capital markets businesses” was also given as a reason for reviewing Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Toronto-Dominion Bank and Caisse Centrale Desjardins (Royal Bank of Canada was the only big bank not on the list).

Moody’s is not the only one worried about the willingness of Canadians of all ages to pile on record amounts of debt. Mark Carney, governor of the Bank of Canada, the central bank, has been warning his countrymen for more than a year that debt-fuelled economic growth is unsustainable. Yet the central bank has contributed to the problem by keeping its benchmark interest rate at 1% since September 2010. Aspiring homeowners found low mortgage rates too tempting to resist. Mr Carney maintains that while raising rates now might stem the borrowing binge, it would put other parts of the economy at risk. It would also put upward pressure on an already high Canadian dollar that is trading around parity with the greenback. Only after all other policy levers have been used, including recent moves by the government to tighten mortgage conditions, would he be inclined to use monetary policy to address the problem, he says.