Changes to the Bank of Canada’s Standing Liquidity Facility Policy Regarding the use of Non-Mortgage Loan Portfolio as Collateral

Given the continued improvement in short-term funding conditions, the Bank of Canada (Bank) is announcing that the Bank’s temporary measure of allowing Large Value Transfer System (LVTS) participants to pledge 100 per cent of their total collateral using their non-mortgage loan portfolio (NMLP) for the LVTS and Standing Liquidity Facility (SLF) will be gradually reduced back to the regular level of 20 per cent of each participant's total pledged collateral. As a result, a new limit of 80 per cent of total collateral pledged will come into effect as of August 24, 2020. It will then be reduced to 50 per cent as of September 7, 2020, and to 20 per cent as of September 21, 2020.

Concurrently, for LVTS participants who do not use their NMLP, as of September 7, 2020 these participants will be able to hold up to 70 per cent of their total pledged collateral in securities that are subject to concentration limits and this will be reduced to 40 per cent (limit pre-temporary measures) as of September 21, 2020.

Previously, in response to deteriorating market conditions, the Bank announced on March 18, 2020 that it increased the limits for the NMLP and for securities subject to concentration limits to 100 per cent, as part of the Bank’s measures to provide liquidity and support for the financial system.

The current list of securities eligible as collateral under the Bank of Canada's Standing Liquidity Facility can be found on the Bank's website.

The Bank will continue to monitor short-term funding conditions as well as global market developments, and, will revise these concentration limits if necessary.

Financial Markets Department

Financial Markets Department


Content Type(s): Press, Market notices