Financial stability - Bank of Canada
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Bank of Canada RSS Feedsen2024-03-29T01:49:28+00:00Bank of Canada Liquidity Actions in Response to the Financial Market Turmoil
https://www.bankofcanada.ca/wp-content/uploads/2010/06/zorn.pdf
In response to the financial crisis of 2007-09, the Bank of Canada intervened repeatedly to stabilize the financial system and limit the repercussions of the crisis on the Canadian economy. This article reviews the extraordinary liquidity measures taken by the Bank during this period and the principles that guided the Bank's interventions. A preliminary assessment of the term liquidity facilities provided by the Bank suggests that they were an important source of liquidity support for some financial institutions and, on a broader basis, served to reduce uncertainty among market participants about the availability of liquidity, as well as helping to promote a return to well-functioning money markets.2009-09-11T10:06:46+00:00enBank of Canada Liquidity Actions in Response to the Financial Market Turmoil2009-09-11Understanding Corporate Bond Spreads Using Credit Default Swaps
https://www.bankofcanada.ca/wp-content/uploads/2010/06/garcia.pdf
Corporate bond spreads worldwide have widened markedly since the beginning of the credit crisis in 2007. This article examines default and liquidity risk–the main components of the corporate bond spread–for Canadian firms that issue bonds in the U.S. market, focusing in particular on their evolution during the credit crisis. They find that, during this period, the liquidity component increased more for speculative-grade bonds than it did for investment-grade bonds, consistent with a "flight-to-quality" phenomenon. An important implication of their results for policy-makers seeking to address problems in credit markets is that the liquidity risk in corporate spreads for investment and speculative bonds behaves differently than the default risk, especially during crisis episodes.2009-09-11T09:52:29+00:00enUnderstanding Corporate Bond Spreads Using Credit Default Swaps2009-09-11