By Money Morning Staff

When Air Force One carried U.S. President Barack Obama on his first official visit abroad last month, the 44th president observed tradition and headed north.
His destination: Canada.

"One of the things that I think has been striking about Canada is that in the midst of this enormous economic crisis … [It's] shown itself to be a pretty good manager of the financial system in the economy in ways that we haven’t always been here in the United States," President Obama said.

Thanks in part to the near-decade-long commodities boom, Canada looks to be in better shape than most countries. 

The northern nation has had 12 consecutive years of budget surpluses. Its national pension system has been overhauled, and its healthcare structure, funded by taxes and accessible to all, runs at 9.7% of gross domestic product (GDP), versus 15.2% in the United States. 

Also, Canadians tend to be somewhat more conservative than Americans. Though they can’t brag about being the biggest savers around, they do sock away for rainy days at two-to-three times the American rate of 1% of disposable income. And they’ve had the good sense to avoid the insanely irresponsible "no-money-down," or worse yet, "negative amortization" mortgage shenanigans.

Due to centuries old bilateral trade between the two nations, and now the North American Free Trade Agreement (NAFTA), it has long been an accepted "truism" that when the United States sneezes, Canada catches cold. 

At first glance, that makes sense, as roughly 75% of Canadian exports are destined for the United States. But in reality, those tend to be concentrated in the manufacturing sector, and exports to America equate to less than 15% of Canada’s total economic output. 

But where Canada has really shone is in its banking system. 

Banking Culture Shock

Except for some minor, limited exposure, Canadian banks have not suffered a single failure throughout the financial crisis that’s been gripping much of the rest of the world. 

In fact, last year, the World Economic Forum ranked Canada’s banking system as the world’s safest. America’s banking system, by comparison, ranked 40th.

The beauty of Canada’s banking system is that it is essentially an oligopoly. That is, five large banks dominate, creating a core that’s rounded out by a handful of smaller banks and credit unions, which tend to concentrate regionally. 

So why are Canadian banks so much healthier than their worldwide counterparts?

To begin with, while hefty fees imposed by Canadian banks chafe consumers, they also help keep the institutions flush with capital.