Temporary Changes to the Bank of Canada’s Standing Liquidity Facility (SLF) Collateral Policy Regarding the Non-Mortgage Loan Portfolio (NMLP) and Settlement Balances

Under its Standing Liquidity Facility (SLF), the Bank of Canada is prepared to provide liquidity on a daily basis to financial institutions that participate directly in the payments systems operated by Payments Canada. Loans made by the Bank of Canada must be fully collateralized.

To give institutions greater flexibility in managing their collateral, effective 17 March 2020, the Bank of Canada will allow Large Value Transfer System (LVTS) participants to temporarily assign an additional 20 percent of their NMLP.  This brings the total allowable amount to 40 percent of their total pledged collateral. 

The increase in NMLP allows LVTS participants who use their NMLP to hold up to 60% of their pledged collateral in asset-types which are subject to concentration limits.  As such effective 17 March 2020 for LVTS participants who do not use their NMLP, these participants will be able to hold up to 60% in securities that are subject to concentration limits (currently limited to 40%).

In addition to this exceptional liquidity initiative, effective 17 March 2020, the Bank of Canada is increasing the target for the minimum daily level of settlement balances to $1,000 million, from its current level of $250 million.

The Bank of Canada continues to closely monitor global market developments and remains committed to providing liquidity as required to support the functioning of the Canadian financial system.

Scott Kinnear
Director
Financial Markets Department
Bank of Canada
613 782-7723

Lorie Zorn
Director
Financial Markets Department
Bank of Canada
403 956-4532

Media Relations
Bank of Canada
613 782-8782

Content Type(s): Press, Market Notices