The International Monetary Fund says the Canadian government should look for ways to clip the wings of CMHC and eventually get out of the mortgage insurance business altogether, reports CTV News.

The Washington-based financial organization says in a working paper that government actions to cool Canada's hot housing have had some impact, but the market remains the single most important domestic risk to the economy.

Furthermore, it notes that if there is a crash, taxpayers would be left holding the bag because CMHC guarantees high-risk mortgage debt through government backing.

Ottawa should impose the same oversight on CMHC as it does private mortgage insurers and try to increase the private sector's participation in the market from the current level of about 25 per cent, the paper says.

Longer term, the IMF says the government should consider eliminating its role in the mortgage insurance business altogether, as Australia has done.

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