A stable and efficient financial system is essential for sustained economic growth and rising living standards.
The Bank of Canada promotes the economic and financial welfare of Canada by fostering a stable and efficient financial system, which includes banks and credit unions, the financial markets, and clearing and settlement systems. The Bank does this by:
- providing central banking services, including liquidity and lender-of-last-resort facilities;
- overseeing and acting as the resolution authority for critical financial market infrastructures;
- conducting and publishing analyses and research;
- helping to develop and implement policy; and
- providing settlement accounts for Payments Canada payment systems
In addition to promoting a sound financial system at home, the Bank contributes to international discussions on important financial system issues, collaborates with other central banks on research into the international financial system and provides technical assistance. The Bank of Canada:
- provides experienced personnel to take part in joint missions of the International Monetary Fund (IMF) and the World Bank
- is a major participant in the Financial Stability Board (FSB), which was established to address vulnerabilities and to develop and implement strong regulatory, supervisory and other policies in the interest of financial stability
- contributes to Canada's participation in G-20 discussions on global economic stability
- provides ongoing support for the work of committees and working groups of the Bank for International Settlements (BIS)
Provision of liquidity to the financial system
The Bank of Canada is the ultimate source of liquid funds to the financial system, and serves as the system’s “lender of last resort.” The deployment of its routine and emergency liquidity tools are guided by the Bank’s framework for market operations and liquidity provision.
Oversight and resolution of financial market infrastructures
Under the authority of Canada’s Payment Clearing and Settlement Act, the Bank conducts regulatory oversight for designated financial market infrastructures (FMIs) and acts as the resolution authority for domestic designated FMIs. These include systemically important payment systems and clearing and settlement systems. Oversight is conducted according to the Bank of Canada’s Risk-Management Standards for Designated FMIs.
Analysis and research
Assessing financial stability
Bank staff conduct analysis and research to identify and mitigate systemic risks that might impair the functioning of the financial system. The results are published once a year in the Financial System Review.
Retail payments supervision
Under the Retail Payment Activities Act, the Bank of Canada will be responsible for supervising payment service providers. Our aim is to build confidence in the safety and reliability of their services while protecting users from certain risks. Payment service providers will be required to register with the Bank and to comply with requirements for operational risk management and safeguarding end-user funds.