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Certainly they're bearing up well. And admittedly no Canadian bank's shares have performed the spectacular belly flop that U.S. peers like Citigroup Inc. (NYSE:C) have. And no Canadian insurer has become a ward of the state like American International Group Inc. (NYSE:AIG). But we might want to wait till late summer before we claim -- as the The Wall Street Journal did again Friday -- that Canada's banks are the best in the world. Here are a few sobering facts about the Canadian banking system that may at least raise some question about the beloved lenders. No. 1: The macro environment could sour in Canada. All Canadian banks make three-quarters or more of their money domestically, and Canadian defaults could rise this year. Statistics Canada has reported that the unemployment rate in April rose two percentage points to 8.0% from a year earlier. And the Superintendent of Bankruptcy has said that insolvencies by individuals totalled 13,629 in March, up 16.4% from February and 57% from March 2008. In other words, consumer defaults could soon whack Canadian bank earnings. No 2. The Canadian dollar is soaring again. The currency that wallowed around 78 U.S. cents when there was snow on the ground exceeded 91 cents on Friday. That is going to squeeze exporters' margins and could be especially harmful in hard-pressed Ontario. Could corporate defaults be a problem later this year as well? No. 3. Foreign earnings could suffer. The four largest banks -- Royal Bank of Canada (NYSE:RY), Toronto-Dominion Bank (NYSE:TD), Bank of Nova Scotia (NYSE:BNS) and Bank of Montreal (NYSE:BMO) -- all have substantial overseas businesses, mostly in the U.S. With the Canadian dollar soaring, the contribution to earning from those businesses will likely shrink. Already, there is a pause for concern. Whereas the Journal cited the banks' strong second-quarter earnings as the reason for the latest praise, Royal Bank shares fell 4.2% to C$43.57 ($39.91) by midday Friday after it reported disappointing results. Maybe Canadian banks will still be considered kings of the hill by the end of the year. After all, what bank earnings won't stink in the third and fourth quarters? But there's enough reason for concern to wait a bit before sending the laurels up north. - Peter Moreira
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Maybe, just maybe, the exuberance surrounding the Canadian banking sector is getting just a tad irrational. 
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