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Bank of Canada Announces Higher Target for Settlement Balances to Reinforce the Target for the Overnight Rate

Effective Friday, 29 January 2016, the Bank is increasing the target for the minimum daily level of settlement balances to $500 million, from its current level of $150 million. This measure will remain in effect until further notice.

Various indicators of the overnight interest rate have recently been slightly, but persistently, above the Bank’s target for the overnight rate, indicating some ongoing frictions in the system. Today’s announced measure is designed to counter those frictions, and to reinforce the Bank’s target for the overnight rate1 by encouraging market participants to trade overnight balances with each other at levels closer to the target rate.

The Bank continues to monitor conditions in the overnight market, and will conduct overnight repos or overnight reverse repos, as needed. The Bank may also further adjust the target level of settlement balances, depending on conditions in the overnight market.

Information on Large Value Transfer System settlement balances and any market intervention is available in the Market Operations Indicators section of the Bank’s website.  

For further information, please contact:

Bank of Canada

Assistant Director
Financial Markets Department

Content Type(s): Market notices
  1. 1. For further details on the framework for the implementation of monetary policy, see “The Bank of Canada’s Market Operations and Liquidity Framework”.[]