E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit - Bank of Canada
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Bank of Canada RSS Feedsen2024-03-29T02:37:07+00:00Improving the Efficiency of Payments Systems Using Quantum Computing
https://www.bankofcanada.ca/2022/12/staff-working-paper-2022-53/
We develop an algorithm and run it on a hybrid quantum annealing solver to find an ordering of payments that reduces the amount of system liquidity necessary without substantially increasing payment delays.2022-12-22T14:14:19+00:00enImproving the Efficiency of Payments Systems Using Quantum Computing2022-12-22Digital currencies and fintechFinancial institutionsFinancial servicesFinancial system regulation and policiesPayment clearing and settlement systemsStaff Working Paper 2022-53https://www.bankofcanada.ca/wp-content/uploads/2022/12/swp2022-53.pdfImproving the Efficiency of Payments Systems Using Quantum ComputingChristopher McMahonDonald McGillivrayAjit DesaiFrancisco RivadeneyraJean-Paul LamThomas LoDanica MarsdenVladimir SkavyshDecember 2022CC6C61C63DD8D83EE4E42E5E58Understanding Post-COVID Inflation Dynamics
https://www.bankofcanada.ca/2022/12/staff-working-paper-2022-50/
We propose a macroeconomic model with a nonlinear Phillips curve that has a flat slope when inflationary pressures are subdued and steepens when inflationary pressures are elevated. Our model can generate more sizable inflation surges due to cost-push and demand shocks than a standard linearized model when inflation is high.2022-12-13T10:42:51+00:00enUnderstanding Post-COVID Inflation Dynamics2022-12-13Business fluctuations and cyclesCentral bank researchCoronavirus disease (COVID-19)Economic modelsInflation and pricesInflation: costs and benefitsMonetary policyMonetary policy implementationStaff Working Paper 2022-50https://www.bankofcanada.ca/wp-content/uploads/2022/12/swp2022-50.pdfStaff Working Paper 2022-50Martin HardingJesper LindéMathias TrabandtDecember 2022EE3E30E31E32E37E4E44E5E52Monetary Policy, Credit Constraints and SME Employment
https://www.bankofcanada.ca/2022/12/staff-working-paper-2022-49/
We revisit an old question: how do financial constraints affect the transmission of monetary policy to the real economy? To answer this question, we propose a simple empirical strategy that combines firm-level employment and balance sheet data, identified monetary policy shocks and survey data on financing activities.2022-12-09T13:01:12+00:00enMonetary Policy, Credit Constraints and SME Employment2022-12-09Credit and credit aggregatesEconometric and statistical methodsFirm dynamicsLabour marketsMonetary policyStaff Working Paper 2022-49https://www.bankofcanada.ca/wp-content/uploads/2022/12/swp2022-49.pdfMonetary Policy, Credit Constraints and SME EmploymentJulien ChampagneÉmilien Gouin-BonenfantDecember 2022EE2E3E4E43E5E52GG3Regulatory Requirements of Banks and Arbitrage in the Post-Crisis Federal Funds Market
https://www.bankofcanada.ca/2022/11/staff-working-paper-2022-48/
This paper explains the nature of interest rates in the U.S. federal funds market after the 2007-09 financial crisis. We build a model of the over-the-counter lending market that incorporates new aspects of the financial system: abundance of liquidity, different regulatory standards for banks, and arbitrage opportunities created by limited access to the facility granting interest on excess reserves.2022-11-28T14:49:49+00:00enRegulatory Requirements of Banks and Arbitrage in the Post-Crisis Federal Funds Market2022-11-28Central bank researchEconomic modelsFinancial institutionsFinancial marketsFinancial stabilityFinancial system regulation and policiesWholesale fundingStaff Working Paper 2022-48https://www.bankofcanada.ca/wp-content/uploads/2022/11/swp2022-48.pdfStaff Working Paper 2022-48Rodney J. GarrattSofia PriazhkinaNovember 2022EE4E42E5E58GG2G28Stablecoins and Their Risks to Financial Stability
https://www.bankofcanada.ca/2022/11/staff-discussion-paper-2022-20/
What risks could stablecoins pose to the financial system? We argue that the stabilization mechanisms of stablecoins give rise to the risk of confidence runs, which can propagate to broader cryptoasset markets and the traditional financial sector. We also argue that stablecoins can contribute to financial stability risks by facilitating the buildup of leverage and liquidity mismatch in decentralized finance. Such risks cannot be addressed by ensuring the price stability of stablecoins alone. Finally, we explore the potential implications of stablecoins for the current system of bank-intermediated credit and for monetary policy.2022-11-28T14:39:47+00:00frStablecoins and Their Risks to Financial Stability2022-11-28Digital currencies and fintechFinancial institutionsFinancial marketsFinancial stabilityFinancial system regulation and policiesStaff Discussion Paper 2022-20https://www.bankofcanada.ca/wp-content/uploads/2022/11/sdp2022-20.pdfStaff Discussion Paper 2022-20Cameron MacDonaldLaura ZhaoNovember 2022EE4E42E44E5E58GG2G23Tracking the financial vulnerabilities of households and the housing market
https://www.bankofcanada.ca/2022/11/tracking-the-financial-vulnerabilities-of-households-and-the-housing-market/
The Bank of Canada is publishing a new set of indicators of financial vulnerabilities. This will allow households, the private sector, financial authorities and governments to better understand and monitor the evolution of two key vulnerabilities in the financial system: the elevated level of household indebtedness and high house prices.2022-11-22T11:45:37+00:00enTracking the financial vulnerabilities of households and the housing market2022-11-22Variable-rate mortgages with fixed payments: Examining trigger rates
https://www.bankofcanada.ca/2022/11/staff-analytical-notes-2022-19/
We estimate the share of variable-rate mortgages with fixed payments that reached the so-called trigger rate—the interest rate at which mortgage payments no longer cover the principal. Amid rising interest rates, this share was close to 50% at the end of October 2022 and could potentially reach 65% in 2023.2022-11-22T11:43:13+00:00enVariable-rate mortgages with fixed payments: Examining trigger rates2022-11-22Stagflation and Topsy-Turvy Capital Flows
https://www.bankofcanada.ca/2022/11/staff-working-paper-2022-46/
Unregulated capital flows are likely excessive during a stagflation episode, owing to a macroeconomic externality operating through the economy’s supply side. Inflows raise domestic wages and cause unwelcome upward pressure on firm costs, yet market forces likely generate such inflows. Optimal capital flow management instead requires net outflows.2022-11-10T10:24:04+00:00enStagflation and Topsy-Turvy Capital Flows2022-11-10Inflation and pricesInternational financial marketsInternational topicsMonetary policyStaff Working Paper 2022-46https://www.bankofcanada.ca/wp-content/uploads/2022/11/swp2022-46.pdfStaff Working Paper 2022-46Julien BenguiLouphou CoulibalyNovember 2022DD6D62EE5E52FF3F32F38F4F41Archetypes for a retail CBDC
https://www.bankofcanada.ca/2022/10/staff-analytical-note-2022-14/
A variety of technology designs could support retail central bank digital currency (CBDC) systems. We develop five archetypes of CBDC systems, outline their characteristics and discuss their trade-offs. This work serves as a framework to analyze and compare different designs, independent of vendor, platform and implementation.2022-10-05T12:15:01+00:00enArchetypes for a retail CBDC2022-10-05Harnessing the benefit of state-contingent forward guidance
https://www.bankofcanada.ca/2022/09/staff-analytical-note-2022-13/
A low level of the neutral rate of interest increases the likelihood that a central bank’s policy rate will reach its effective lower bound (ELB) in future economic downturns. In a low neutral rate environment, using an extended monetary policy toolkit including forward guidance helps address the ELB challenge. Using the Bank’s Terms-of-Trade Economic Model, we assess the benefits and limitations of a state-contingent forward guidance implemented within a flexible inflation targeting framework.2022-09-26T11:27:58+00:00enHarnessing the benefit of state-contingent forward guidance2022-09-26