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Taking the pulse of Canada’s financial system

Deputy Governor Toni Gravelle discusses how the Bank of Canada is carefully monitoring our financial system as the economy recovers from the COVID‑19 pandemic.

Watch Deputy Governor Gravelle speak to the Autorité des marchés financiers via webcast. Read the full speech.

One of the Bank’s core functions is to promote a stable and efficient financial system—in good times and in bad. Learn more from The Economy, Plain and Simple.

Canada’s financial system is resilient

Before COVID‑19, the Bank was concerned about risks to the financial system that could hurt Canada’s economic well-being if a recession hit—things like high levels of household debt and overheating housing markets. But because of our resilient financial system and targeted responses to the pandemic by public authorities, we haven’t seen broad stress across the financial system.

Early on, the Bank acted quickly to restore and maintain market functioning, and the federal government launched a range of support programs to help millions of households and businesses cover financial gaps.”

Risks to households, businesses and markets remain

As we said in our May 2020 Financial System Review, the longer the pandemic affects jobs and incomes, the greater the risk of financial trouble for households and businesses. In the early days we also saw strains on the functioning of financial markets. Six months later, we have a better idea of the impacts of COVID‑19.


Government income support programs and loan deferral initiatives offered by financial institutions helped households get through the initial crisis. People were able to keep paying their debts, and we’re seeing lower levels in household and consumer debt. This is cause for optimism.

Going forward, we will keep a close eye on household debt levels, especially with interest rates remaining low for the foreseeable future.


The pandemic severely affected many businesses across Canada. Businesses relying on in-person contact suffered most, including those in:

  • transportation
  • arts and entertainment
  • accommodation and food services

Government wage and rent subsidies have helped keep bankruptcy filings low, but we’ll need to watch how more localized shutdowns affect the long recovery.

Market functioning

With uncertainty high, it is vital that markets keep functioning well to support what households and businesses may need down the road.

The Bank put in place asset purchase programs and liquidity facilities at the start of the pandemic, and these have kept the financial system running smoothly. We’ve since been able to end some of these programs. But we can and will start them up again if the need arises.

The Bank will continue to watch for vulnerabilities

The Bank keeps its finger on the pulse of the Canadian economy in a variety of ways, including the Financial System Survey that was released last week. According to this survey of financial industry experts, most are fairly confident that the financial system could withstand another shock. But they also feel the risks and vulnerabilities are greater.

We must monitor the buildup of financial system vulnerabilities and remain vigilant as the economy recovers from this crisis. But at the same time, we must not lose sight of ongoing issues that are also very important to financial stability, such as climate and cyber risks.”

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