November 22, 2022
Credit and credit aggregates, Lender of last resort, Monetary and financial indicators, Financial institutions, Financial markets, International financial markets, Monetary policy implementation, Financial system regulation and policies, Financial services, Financial stability, Market structure and pricing, Payment clearing and settlement systems
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November 22, 2022
Financial stability in times of uncertainty
Senior Deputy Governor Carolyn Rogers discusses the Bank’s work to monitor risks and vulnerabilities in Canada’s financial system and support greater financial stability. -
Variable-rate mortgages with fixed payments: Examining trigger rates
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. -
Stagflation and Topsy-Turvy Capital Flows
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. -
Considerations for the allocation of non-default losses by financial market infrastructures
Non-default losses of financial market infrastructures (FMIs) have gained attention due to their potential impacts on FMIs and FMI participants, and the lack of a common approach to address them. A key question is, who should absorb these losses? -
Grasping De(centralized) Fi(nance) Through the Lens of Economic Theory
We analyze the value proposition and limitations of decentralized finance (DeFi). Based on a distributed ledger and smart contracts, DeFi can guarantee the execution of financial contracts, potentially lowering the costs of intermediation and improving financial inclusion. -
Forecasting Banks’ Corporate Loan Losses Under Stress: A New Corporate Default Model
We present a new corporate default model, one of the building blocks of the Bank of Canada’s bank stress-testing infrastructure. The model is used to forecast corporate loan losses of the Canadian banking sector under stress. -
How does the Bank of Canada’s balance sheet impact the banking system?
We examine how changes in the Bank of Canada’s balance sheet impact the banking system. Quantitative easing contributed to an increase in the size of the banking system’s balance sheet and an improvement in bank liquidity coverage ratios. Quantitative tightening is expected to partially reverse these impacts. The banking system will have to adjust its liquidity management strategy in response. -
September 20, 2022
Macroeconomics of the 2020s: What we’ve learned, and what’s to come
Deputy Governor Paul Beaudry discusses the macroeconomic lessons we’ve learned during the COVID-19 pandemic, and what lies ahead to bring inflation back to target. -
September 20, 2022
Anatomy of a pandemic: Applying old lessons and learning from new ones
Deputy Governor Paul Beaudry describes how the lessons learned from previous economic crises helped central bankers during the global COVID-19 pandemic. He also talks about how managing inflation expectations can help bring inflation back to target.