Stéphane Lavoie - Latest

• May 19, 2011

  Lessons from the Use of Extraordinary Central Bank Liquidity Facilities

  Bank of Canada Review - Spring 2011 Stéphane Lavoie, Alex Sebastian, Virginie Traclet

  The recent crisis was characterized by widespread deterioration in funding conditions, as well as impairment of the mechanism through which liquidity is normally redistributed within the financial system. Central banks responded with extraordinary measures. This article examines the provision of liquidity by central banks during the crisis as they adapted their existing facilities and introduced new ones, while encouraging a return to private markets and mitigating moral hazard. A review of this experience illustrates the importance of clear principles for intervention, a flexible operating framework, and clear communication and co-operation by central banks. By exposing the degree of interdependence of financial institutions and markets, the crisis highlighted the need for reforms aimed at improving the infrastructure supporting core funding markets and the liquidity of individual institutions.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, Financial stability, Lender of last resort
• August 23, 2004

  The Evolution of Liquidity in the Market for Government of Canada Bonds

  Bank of Canada Review - Summer 2004 Stacey Anderson, Stéphane Lavoie

  Using turnover ratios, Anderson and Lavoie describe the recent evolution of liquidity in various secondary government bond markets, focusing specifically on the market for Government of Canada securities. They attribute much of the recent variation in liquidity to such cyclical factors as changes in the interest rate environment and investors' appetite for risk, as well as developments in equity markets in the late 1990s. They also examine longer-term structural and policy-related trends, including the rate of adoption of financial and technological innovations and the level of government borrowing and debt-management initiatives.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Debt management, Financial markets, Recent economic and financial developments