Financial system regulation and policies - Bank of Canada
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Bank of Canada RSS Feedsen2024-03-29T11:17:38+00:00Introducing Multiple Interest rates in ToTEM
https://www.bankofcanada.ca/wp-content/uploads/2011/08/dorich.pdf
This article describes changes to the structure of ToTEM—the Bank of Canada’s main model for projection and policy analysis—that allow an independent role for long-term interest rates, as well as for the risk spreads that lead to differences in the interest rates faced by households, firms and the government. These changes broaden the range of policy questions that the model can address and improve its ability to explain data. The authors use the model to simulate the effects of shocks to the risk spreads on interest rates similar to those that occurred during the recent financial crisis. They also use the model to assess the macroeconomic impact of higher requirements for bank capital and liquidity.2011-08-18T09:38:29+00:00enIntroducing Multiple Interest rates in ToTEM2011-08-18The BoC-GEM-Fin: Banking in the Global Economy
https://www.bankofcanada.ca/wp-content/uploads/2011/08/resende.pdf
This article describes the Bank of Canada’s version of the Global Economy Model structured to incorporate an active banking system that features an interbank market and cross-border lending. After describing the new model, the authors use it to examine the responses of selected U.S. and Canadian macroeconomic variables to a “credit crunch” in the United States and also to study the impact of changes in the regulatory limits to bank leverage in Canada. They also discuss the relative merits of a monetary policy framework based on inflation targeting and one based on price-level targeting in the presence of shocks to the U.S. and Canadian banking sectors.2011-08-18T09:36:28+00:00enThe BoC-GEM-Fin: Banking in the Global Economy2011-08-18Bank Balance Sheets, Deleveraging and the Transmission Mechanism
https://www.bankofcanada.ca/wp-content/uploads/2011/08/meh.pdf
The author investigates the influence of bank capital on economic activity, using a macroeconomic model that incorporates an explicit role for financial intermediation. The analysis focuses on the role of a “bank-capital channel” in propagating and amplifying monetary policy actions and other shocks. The question of whether weaker bank balance sheets make the economy more vulnerable to adverse shocks is examined, together with the impact of initiatives, such as countercyclical capital buffers, on the transmission of monetary policy and other shocks to the real economy.2011-08-18T09:34:43+00:00enBank Balance Sheets, Deleveraging and the Transmission Mechanism2011-08-18Mortgage Debt and Procyclicality in the Housing Market
https://www.bankofcanada.ca/wp-content/uploads/2011/08/christensen.pdf
This article focuses on the role that loans backed by housing collateral play in amplifying housing booms and, more generally, procyclicality in the housing market. The author uses a model developed to include borrower and lender households, as well as a housing market, to examine the impact that altering the loan-to-value ratio (either permanently or countercyclically) might have on the volatility of house prices and mortgage debt.2011-08-18T09:32:17+00:00enMortgage Debt and Procyclicality in the Housing Market2011-08-18