Bank of Canada Governor Tiff Macklem, speaking at a global financial risk conference hosted by the Federal Reserve Bank of New York on June 23, 2026, highlighted that heightened trade protectionism and geopolitical tensions are encouraging over-investment in the United States and within countries' own borders. This trend, often referred to as "friend-shoring" or "near-shoring," is reallocating capital based on political alliances rather than economic efficiency, leading to suboptimal investment decisions.
Macklem emphasized that this misallocation of capital could result in increased financial risks, including a buildup of excess capacity in certain sectors and potentially inflated asset valuations in favored regions like the US. He explicitly stated that such a scenario could pose "financial stability risks" globally, suggesting that capital flows driven by non-economic factors could undermine the efficiency and stability of the international financial system.
The governor's comments underscore a growing concern among central bankers about the fragmentation of the global economy. While not providing specific dollar figures or percentages, Macklem's warning points to the broader economic consequences of a less integrated world, where investment decisions are increasingly influenced by geopolitical considerations rather than purely market-driven forces.
