Canada will not suffer the same economic fate as its neighbour south of the border, the federal finance minister said today in Toronto.

“Although, of course, our economy is closely tied to the United States, we are not the United States,” said Jim Flaherty, during a speech at the Economic Club of Toronto. “The factors behind the current American malaise are not likely to be duplicated here.”

Flaherty cited the fact that Canada’s financial institutions are well capitalized, have low exposure to the subprime market and are not invested heavily in securities backed by subprime mortgages.

He also noted that Canada’s housing market “remains solid” and “has not experienced the same stresses as in the United States, certainly not the same bubble.”

When it comes to individual investors, Flaherty said the country is seeing a trend toward less saving. “We’re concerned about savings in Canada,” he told the Toronto audience, adding that the recently introduced tax-free savings account (TFSA) is intended to encourage Canadians to put aside more of their money. “Our long-term financial health requires having a nation of savers.”

The TFSA, which begins in 2009, allows Canadians to save up to $5000 each year in a tax-free account. All investment income held within a TFSA is exempt from tax and not taxed when withdrawn—although the money is taxed upon deposit. “A lot more, I anticipate, will be said about this later this year,” Flaherty said of the upcoming accounts. “Because the banks, other institutions and credit unions are going to be trying to attract these tax-free savings accounts starting January 1, 2009.”

Overall, Flaherty said the federal government expects more than 90% of Canadians will hold all of their financial assets in tax-efficient savings vehicles within 15 to 20 years.

Also of concern when it comes to saving are recent trends in the mortgage market. “We have seen an inclination toward longer-term amortizations and smaller down payments,” Flaherty told reporters after the speech. “That is a matter of some concern. We are continuing to monitor that.”