Financial System Hub

Promoting a stable and efficient financial system

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Financial Stability Report—2025

Canada’s financial system is resilient. Overall, households, businesses, banks and non-bank financial intermediaries successfully weathered the pandemic, a period of elevated inflation, and sharp increases in interest rates. But the trade war currently threatens the Canadian economy and poses risks to financial stability.

Tiff Macklem

Carolyn Rogers

Toni Gravelle

Sharon Kozicki

Rhys R. Mendes

Nicolas Vincent

Michelle Alexopoulos

Content Type(s): Financial Stability Report, Publications

May 8, 2025

Financial System Survey

Financial System Survey highlights—2025

This article presents the key results from the 2025 Bank of Canada Financial System Survey, conducted between February 10 and 28. The survey included a special section on scenarios that could lead to a severe repricing in financial markets in the near term.

Content Type(s): Financial System Survey, Publications

May 8, 2025

Indicators of financial vulnerabilities

Get quarterly data for the indicators we use to track the evolution of two vulnerabilities in the Canadian economy: the elevated level of household indebtedness and high house prices.

Updated: March 21, 2025

Financial System Hub articles

Will asset managers dash for cash? A summary of the implications for central banks

We consider ways central banks could adapt in the event of an increased risk of a dash for cash from asset managers. We explore ideas such as new facilities that ease asset managers’ ability to convert existing assets to cash or new assets with liquidity that central banks would guarantee.

David Cimon

Jean-Philippe Dion

Jean-Sébastien Fontaine

Jabir Sandhu

Content Type(s): Financial System Hub articles, Publications

March 17, 2025

Staff analytical notes

Stress testing central counterparties for resolution planning

The Bank of Canada completed its first resolution plan for the Canadian Derivatives and Clearing Corporation (CDCC) in 2024. To estimate the resolution costs, we apply the extreme value theory method to simulate the credit losses that would result from extreme scenarios where multiple clearing members default at the same time.

Katherine Brennan

Bo Young Chang

Alper Odabasioglu

Radoslav Raykov

Content Type(s): Staff analytical notes, Staff research

March 14, 2025

Staff analytical notes

Monetary policy, interest rates and the Canadian dollar

Changes in domestic interest rates affect the value of the Canadian dollar less than changes in the risk premium do. These variations often occur when a broad shift in risk sentiment occurs in global markets. Ultimately, the value of the currency reflects long-term, slow-moving features of the economies.

Jean-Sébastien Fontaine

Ingomar Krohn

James Kyeong

Rishi Vala

Konrad Zmitrowicz

Content Type(s): Staff analytical notes, Staff research

February 4, 2025

Staff analytical notes

Using new loan data to better understand mortgage holders

The Bank of Canada is using an enhanced dataset that tracks the stock of outstanding mortgages and home equity lines of credit held by federally regulated lenders. This paper highlights some of the new details in the dataset and how they impact the Bank’s understanding of the mortgage market.

Odae Al Aboud

Saarah Sheikh

Adam Su

Yang Xu

Content Type(s): Staff analytical notes, Staff research

January 7, 2025

Staff analytical notes

How foreign central banks can affect liquidity in the Government of Canada bond market

We find that foreign central banks own a large share of Government of Canada (GoC) bonds and tend to hold their positions for longer than other types of asset managers. This buy-and-hold behaviour could offer benefits. For example, foreign central banks may be less likely than other asset managers to sell bonds and add to strains on market liquidity in periods of turmoil. However, foreign central banks’ buy-and-hold behaviour combined with their minimal lending of GoC bonds in securities-financing markets, as observed in our available data, can potentially lower liquidity because fewer GoC bonds are available for others to transact in secondary markets. Indeed, we find that higher levels of foreign central banks’ GoC bond holdings are related to lower liquidity.

Patrick Aldridge

Jabir Sandhu

Sofia Tchamova

Content Type(s): Staff analytical notes, Staff research

December 13, 2024

Staff analytical notes

Mortgage stress tests and household financial resilience under monetary policy tightening

This note analyzes mortgage stress tests, a macroprudential tool. We find that when mortgage stress tests are applied to all mortgage purchase originations, they improve credit quality and reduce credit and house price growth. They also improve the resilience of borrowers to financial shocks, such as the large increase in interest rates during 2022–23.

Jonathan Hartley

Nuno Paixão

Content Type(s): Staff analytical notes, Staff research

November 6, 2024

Speeches and appearances Remarks

Canada’s mortgage market—A question of balance

Senior Deputy Governor Carolyn Rogers looks at the mortgage market in Canada—past, present and future.

Carolyn Rogers

Content Type(s): Press, Remarks, Speeches and appearances

November 6, 2024

Staff analytical notes

CORRA: Explaining the rise in volumes and resulting upward pressure

On May 27, 2024, the settlement period for trading GoC bonds in the secondary market in Canada moved from two days to one. This shortened time for settling secondary cash bond trades caused CORRA volumes to rise significantly, and they have remained elevated since. This combined with the skew in demand for funding has pressured CORRA higher. We find no indications that any other factors are contributing to the most recent pressures on CORRA.

Boran Plong

Neil Maru

Content Type(s): Staff analytical notes, Staff research

August 12, 2024

Staff analytical notes

The reliance of Canadians on credit card debt as a predictor of financial stress

I analyze the relationship between carrying a credit card balance and future financial stress. I find that carrying a balance significantly increases the likelihood that credit card holders miss future debt payments. This likelihood tends to rise as credit card balances grow and are held for long periods.

Jia Qi Xiao

Content Type(s): Staff analytical notes, Staff research

July 15, 2024

Staff analytical notes

Could all-to-all trading improve liquidity in the Government of Canada bond market?

We find that on any given day, nearly half of Government of Canada bond transactions by clients of dealers can be offset with other clients, including during the turmoil in March 2020. Our results show that under certain conditions clients could potentially trade directly with each other and are a step towards understanding the relevance of broader all-to-all trading in the Government of Canada bond market.

Jabir Sandhu

Rishi Vala

Content Type(s): Staff analytical notes, Staff research

July 15, 2024

Staff analytical notes

How big is cash-futures basis trading in Canada’s government bond market?

Cash-futures basis trading has grown alongside the Government of Canada bond futures market. We examine this growth over time in relation to Government of Canada bond and repurchase agreement markets and provide details on the type of market participants that engage in this type of trading activity.

Andreas Uthemann

Rishi Vala

Content Type(s): Staff analytical notes, Staff research

June 28, 2024

Staff analytical notes

Non-bank financial intermediation: Canada’s submission to the 2023 global monitoring report

We share insights from Canadian data from 2002 to 2022 that the Bank of Canada collected. The Bank submits these data each year to the Financial Stability Board for inclusion in its Global Monitoring Report on Non-Bank Financial Intermediation.

Malcolm Fisher

Alan Walsh

Content Type(s): Staff analytical notes, Staff research

June 28, 2024

Financial Stability Report

Financial Stability Report—2024

Canada’s financial system remains resilient. Over the past year, households, businesses, banks and non-bank financial institutions have continued to proactively adjust to higher interest rates. But this adjustment is not yet over and continues to present risks to financial stability. Key risks include those related to debt serviceability and asset valuations.

Tiff Macklem

Carolyn Rogers

Toni Gravelle

Sharon Kozicki

Rhys R. Mendes

Nicolas Vincent

Content Type(s): Financial Stability Report, Publications

May 9, 2024

Financial System Survey

Financial System Survey highlights—2024

This article presents the key results from the 2024 Bank of Canada Financial System Survey, conducted between February 20 and March 8. The survey included a special section on potential risks arising from different hypothetical interest-rate paths.

Content Type(s): Financial System Survey, Publications

May 9, 2024

Staff analytical notes

Liquidity risks at Canadian life insurance companies

We examine how life insurers manage liquidity risks created by their business model. We find that Canadian life insurers did not face significant liquidity draws and continued their usual investment behaviour during the COVID-19 crisis and as interest rates increased in 2022.

Patrick Aldridge

Stephane Gignac

Rishi Vala

Adrian Walton

Content Type(s): Staff analytical notes, Staff research

April 17, 2024

Financial System Hub articles

Mapping out the implications of climate transition risk for the financial system

We develop a new analytical framework to understand the system-wide implications of climate transition risk. When applying this framework to Canadian data, we find that interconnections within the financial sector could amplify the direct effects of climate transition risk on financial entities.

Gabriel Bruneau

Javier Ojea Ferreiro

Andrew Plummer

Marie-Christine Tremblay

Aidan Witts

Content Type(s): Financial System Hub articles, Publications

January 15, 2024

Financial System Hub articles

Flood risk and residential lending

We present key findings of a recent study that evaluates the credit risk that flooding poses to the residential lending activities of Canadian banks and credit unions. Results show that such risk currently appears modest but could become larger with climate change.

Craig Johnston

Geneviève Vallée

Hossein Hosseini Jebeli

Miguel Molico

Marie-Christine Tremblay

Aidan Witts

Content Type(s): Financial System Hub articles, Publications

January 15, 2024

Staff analytical notes

The impact of higher interest rates on mortgage payments

We investigate how the increase in interest rates since early 2022 is affecting mortgage payments. By November 2023, less than half of mortgage holders had faced higher payments. Many borrowers will see a sizable increase in payments at renewal, although income growth could help mitigate the impact.

Maria teNyenhuis

Adam Su

Content Type(s): Staff analytical notes, Staff research

December 19, 2023

Speeches and appearances Speech summaries

Getting used to higher interest rates

Senior Deputy Governor Carolyn Rogers talks about why interest rates could settle at a higher level than Canadians are used to and why preparing early for that possible outcome is important.

Carolyn Rogers

Content Type(s): Press, Speech summaries, Speeches and appearances

November 9, 2023

Staff analytical notes

Decentralized finance: Innovations and challenges

Decentralized finance surged in popularity around 2020. We explore its value and limitations and highlight some potential regulatory concerns.

Jonathan Chiu

Hanna Yu

Content Type(s): Staff analytical notes, Staff research

October 16, 2023

Staff analytical notes

Three things we learned about the Lynx payment system

Canada transitioned to a new wholesale payment system, Lynx, in August 2021. Lynx is based on a real-time settlement model that eliminates credit risk in the system. This model can require more liquidity; however, Lynx’s design allows Canada’s wholesale payments to settle efficiently.

Nikil Chande

Zhentong Lu

Hiru Rodrigo

Phoebe Tian

Content Type(s): Staff analytical notes, Staff research

October 10, 2023

Staff analytical notes

Do hedge funds support liquidity in the Government of Canada bond market?

While Government of Canada bond transactions of hedge funds are typically in the opposite direction to those of other market participants, during the peak period of market turmoil in March 2020, hedge funds sold these bonds, just as other market participants did. This shows that hedge funds can at times contribute to one-sided markets and amplify declines in market liquidity.

Jabir Sandhu

Rishi Vala

Content Type(s): Staff analytical notes, Staff research

August 1, 2023

Financial Stability Report

Financial System Review—2023

The adjustment to higher interest rates is exposing vulnerabilities in the global financial system. Recent banking sector stresses serve as a reminder that risks can arise and spread quickly. Key areas of concern are bank funding, liquidity in fixed income markets, and households’ ability to service their debts. Other financial system concerns relate to cyber attacks, climate change and cryptoasset markets.

Tiff Macklem

Carolyn Rogers

Paul Beaudry

Toni Gravelle

Sharon Kozicki

Nicolas Vincent

Content Type(s): Financial Stability Report, Publications

May 18, 2023

Financial System Survey

Financial System Survey highlights—2023

This article presents the key results from the 2023 Bank of Canada Financial System Survey, conducted between February 21 and March 10. The survey included a special section on margining practices for non-centrally cleared derivatives.

Content Type(s): Financial System Survey, Publications

May 15, 2023

Staff analytical notes

What we can learn by linking firms’ reported emissions with their financial data

We analyze the financial statements and stock prices of publicly traded firms incorporated in Canada that report greenhouse gas emissions. We find that these firms primarily use equity financing. We also find that equity investors increasingly account for firms’ emissions when making investment decisions but the impact appears small. This suggests that assets exposed to climate change remain at risk of a sudden repricing.

Matthew Ackman

Timothy Grieder

Callie Symmers

Geneviève Vallée

Content Type(s): Staff analytical notes, Staff research

April 3, 2023

Staff analytical notes

Potential benefits and key risks of fiat-referenced cryptoassets

Cryptoassets that reference a national currency (commonly known as stablecoins) aim to peg their value to the reference currency and typically use a reserve of traditional financial assets to maintain the peg. The market value of these fiat-referenced cryptoassets has grown more than thirtyfold between early 2020 and mid-2022. We explore some of their potential benefits and key risks.

Hugh Ding

Natasha Khan

Bena Lands

Cameron MacDonald

Laura Zhao

Content Type(s): Staff analytical notes, Staff research

December 19, 2022

Speeches and appearances Speech summaries

Monitoring the health of Canada’s financial system

Senior Deputy Governor Carolyn Rogers discusses risks and vulnerabilities in our financial system and what the Bank of Canada is doing to support financial stability.

Carolyn Rogers

Content Type(s): Press, Speech summaries, Speeches and appearances

November 22, 2022

Staff analytical notes

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.

Stephen Murchison

Maria teNyenhuis

Content Type(s): Staff analytical notes, Staff research

November 22, 2022

Financial System Hub articles

Five things we learned about Canadian Bitcoin owners in 2021

We present key findings from the 2021 Bitcoin Omnibus Survey on Canadians’ awareness and ownership of Bitcoin. Most Canadians have heard of Bitcoin, which remains primarily used as an investment. Ownership jumped in 2021, reflecting increased savings during the pandemic and greater availability of user-friendly platforms to buy Bitcoin.

Daniela Balutel

Walter Engert

Christopher Henry

Kim Huynh

Marcel Voia

Content Type(s): Financial System Hub articles, Publications

October 12, 2022

Staff analytical notes

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.

Daniel Bolduc-Zuluaga

Brad Howell

Grahame Johnson

Content Type(s): Staff analytical notes, Staff research

September 22, 2022

Staff analytical notes

Fixed-income dealing and central bank interventions

We summarize the theoretical model of central bank asset purchases developed in Cimon and Walton (2022). The model helps us understand how asset purchases ease pressures on investment dealers to restore market conditions in a crisis.

David Cimon

Adrian Walton

Content Type(s): Staff analytical notes, Staff research

June 30, 2022

Staff analytical notes

Potential netting benefits from expanded central clearing in Canada’s fixed-income market

We assess whether more central clearing would enhance the resilience of Canadian fixed-income markets. Our analysis estimates the potential benefits of balance sheet netting under scenarios where central clearing is expanded to new participants.

Jessie Ziqing Chen

Johannes Chen

Shamarthi Ghosh

Manu Pandey

Adrian Walton

Content Type(s): Staff analytical notes, Staff research

June 22, 2022

Staff analytical notes

Analyzing the house price boom in the suburbs of Canada’s major cities during the pandemic

We assess how location affects house prices in Canada. The gap in prices between suburbs and downtown was closing gradually before the pandemic. The gap has been closing faster since spring 2020. This finding reflects a shift in preferences toward more living space.

Louis Morel

Content Type(s): Staff analytical notes, Staff research

June 20, 2022

Financial Stability Report

Financial System Review—2022

The Canadian financial system remains resilient, but vulnerabilities have become more complex and risks have grown. The Bank is carefully watching households’ high levels of mortgage debt, as well as the risks associated with a price correction in Canada’s housing market.

Tiff Macklem

Carolyn Rogers

Timothy Lane

Lawrence L. Schembri

Paul Beaudry

Toni Gravelle

Sharon Kozicki

Content Type(s): Financial Stability Report, Publications

June 9, 2022

Financial System Survey

Financial System Survey highlights—Spring 2022

This article presents the key results from the spring 2022 Bank of Canada Financial System Survey, conducted between February 22 and March 18. The survey included a special section on the potential risks associated with the global normalization of monetary policy.

Content Type(s): Financial System Survey, Publications

June 6, 2022

Staff analytical notes

How well can large banks in Canada withstand a severe economic downturn?

We examine the potential impacts of a severe economic shock on the resilience of major banks in Canada. We find these banks would suffer significant financial losses but nevertheless remain resilient. This underscores the role well-capitalized banks and sound underwriting practices play in supporting economic activity in a downturn.

Andisheh (Andy) Danaee

Harsimran Grewal

Brad Howell

Guillaume Ouellet Leblanc

Xuezhi Liu

Mayur Patel

Xiangjin Shen

Content Type(s): Staff analytical notes, Staff research

May 24, 2022

Financial System Hub articles

Assessing climate change risks to our financial system

Ensuring the stability and efficiency of the financial system is a key part of our work at the Bank of Canada. This includes analyzing structural changes that affect the economy—like climate change. These changes could increase vulnerabilities to the financial system.

Content Type(s): Financial System Hub articles, Publications

January 14, 2022

Staff analytical notes

Housing demand in Canada: A novel approach to classifying mortgaged homebuyers

We introduce a novel approach to categorize mortgaged homebuyers into first-time homebuyers, repeat homebuyers and investors. We show how these groups contribute to activity in Canadian housing markets, and we analyze the differences in their demographic and financial characteristics.

Mikael Khan

Yang Xu

Content Type(s): Staff analytical notes, Staff research

January 13, 2022

Speeches and appearances Remarks

Financial stability through the pandemic and beyond

Deputy Governor Paul Beaudry provides an update on financial vulnerabilities and risks in Canada, including those stemming from the COVID-19 pandemic.

Paul Beaudry

Content Type(s): Press, Remarks, Speeches and appearances

November 23, 2021

Financial System Survey

Financial System Survey highlights—Autumn 2021

This article presents the key results from the autumn 2021 Bank of Canada Financial System Survey, conducted between September 7 and September 24, 2021. The survey included a special section on the implications of low interest rates on strategies and risks.

Content Type(s): Financial System Survey, Publications

November 22, 2021

Financial System Hub articles

Monitoring payment deferrals during the COVID-19 pandemic—update, July 2021

In the initial stages of the COVID-19 pandemic, Canada’s financial institutions allowed households to defer payments on a range of loans. With nearly all of these deferrals having expired, we provide a final update of how these loans have performed through to July 2021.

Geneviève Vallée

Content Type(s): Financial System Hub articles, Publications

September 24, 2021

Staff analytical notes

Can the characteristics of new mortgages predict borrowers’ financial stress? Insights from the 2014 oil price decline

We study the relationship between characteristics of new mortgages and borrowers’ financial stress in Canada’s energy-intensive regions following the 2014 collapse in oil prices. We find that borrowers with limited home equity were more likely to have difficulty repaying debt.

Olga Bilyk

Ken Chow

Yang Xu

Content Type(s): Staff analytical notes, Staff research

September 22, 2021

Staff analytical notes

Reaching for yield or resiliency? Explaining the shift in Canadian pension plan portfolios

“Reach for yield”—This is the commonly heard explanation for why pension plans shift their portfolios toward alternative assets. But we show that the new portfolios also hold more bonds, offer lower average returns and produce smaller and less volatile solvency deficits. These shifts are part of a broader strategy to reduce solvency risk.

Sébastien Betermier

Nicholas Byrne

Jean-Sébastien Fontaine

Hayden Ford

Jason Ho

Chelsea Mitchell

Content Type(s): Staff analytical notes, Staff research

August 25, 2021

Staff analytical notes

Household financial vulnerabilities and physical climate risks

Natural disasters occur more often than before, potentially exposing households to financial distress. We study the intersection between household financial vulnerabilities and severe weather events.

Thibaut Duprey

Colin Jones

Callie Symmers

Geneviève Vallée

Content Type(s): Staff analytical notes, Staff research

August 23, 2021

Staff analytical notes

Can regulating bank capital help prevent and mitigate financial downturns?

Countercyclical capital buffers are regulatory measures developed in response to the global financial crisis of 2008–09. This note focuses on how time-varying capital buffers can improve financial stability in Canada

Alejandro García

Josef Schroth

Content Type(s): Staff analytical notes, Staff research

June 1, 2021

Financial System Hub articles

Monitoring payment deferrals during the COVID-19 pandemic—update, March 2021

In the initial stages of the COVID-19 pandemic, Canada’s financial institutions allowed households to defer payments on a range of loans. With most of these deferrals having expired, we present updated details of how these loans have performed through to March 2021.

Geneviève Vallée

Content Type(s): Financial System Hub articles, Publications

May 21, 2021

Financial Stability Report

Financial System Review Summary—2021

The Canadian financial system proved resilient during the COVID-19 pandemic—thanks to strong risk management and unprecedented fiscal and monetary policy support.

Tiff Macklem

Timothy Lane

Lawrence L. Schembri

Paul Beaudry

Toni Gravelle

Content Type(s): Financial Stability Report, Publications

May 20, 2021

Staff analytical notes

Detecting exuberance in house prices across Canadian cities

We introduce a model to detect periods of extrapolative house price expectations across Canadian cities. The House Price Exuberance Indicator can be updated on a quarterly basis to support the Bank of Canada’s broader assessment of housing market imbalances.

Ugochi Emenogu

Cars Hommes

Mikael Khan

Content Type(s): Staff analytical notes, Staff research

May 20, 2021

Financial System Survey

Financial System Survey highlights—Spring 2021

This article presents the key results from the spring 2021 Bank of Canada Financial System Survey, conducted from February 22 to March 12, 2021. The survey included a special section on commercial real estate.

Content Type(s): Financial System Survey, Publications

May 17, 2021

Staff analytical notes

COVID-19’s impact on the financial health of Canadian businesses: An initial assessment

Despite COVID-19 challenges, bold policy measures in Canada have helped businesses manage cash flow pressures and kept insolvency filings low. But the impact of the pandemic has been uneven, and the financial health of some firms may further deteriorate over the next year.

Timothy Grieder

Mikael Khan

Juan Ortega

Callie Symmers

Content Type(s): Staff analytical notes, Staff research

May 10, 2021

Staff analytical notes

Update on housing market imbalances and household indebtedness

Exceptional strength in the housing market during the pandemic is underpinning Canada’s economic recovery. However, two key vulnerabilities—housing market imbalances and elevated household indebtedness—have intensified.

Mikael Khan

Olga Bilyk

Matthew Ackman

Content Type(s): Staff analytical notes, Staff research

April 9, 2021

Staff analytical notes

Non-bank financial intermediation in Canada: a pulse check

The Canadian non-bank financial intermediation (NBFI) sector saw strong growth in 2018 and 2019. In 2020, COVID‑19 caused a financial shock. We provide a preliminary analysis on the impact of COVID‑19 on the sector as well as an update on its growth.

Rohan Arora

Guillaume Bédard-Pagé

Philippe Besnier

Hayden Ford

Alan Walsh

Content Type(s): Staff analytical notes, Staff research

March 23, 2021

Financial System Hub articles

Monitoring payment deferrals during the COVID-19 pandemic—update, December 2020

During the COVID-19 pandemic, Canada’s financial institutions have allowed households to defer payments on a range of loans. We present updated details of debt payment deferrals by borrowers through to December 2020.

Geneviève Vallée

Content Type(s): Financial System Hub articles, Publications

February 4, 2021

Speeches and appearances Speech summaries

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.

Toni Gravelle

Content Type(s): Press, Speech summaries, Speeches and appearances

November 23, 2020

Financial System Hub articles

Monitoring payment deferrals during the COVID-19 pandemic

Since the start of the COVID-19 pandemic, Canada’s financial institutions have allowed borrowers to defer payments on a range of loans. In a series of charts, we investigate what payment deferrals tell us about the financial health of borrowers and the related risks to financial stability.

Geneviève Vallée

Content Type(s): Financial System Hub articles, Publications

November 23, 2020

Financial System Survey

Financial System Survey highlights—November 2020

This article presents the key results from the autumn 2020 Bank of Canada Financial System Survey, conducted from September 8 to September 25, 2020. The survey included a special section on the impact of and the responses to COVID-19.

Content Type(s): Financial System Survey, Publications

November 20, 2020

Staff analytical notes

Announcing the Bankers’ Acceptance Purchase Facility: a COVID‑19 event study

The Bank of Canada launched the Bankers’ Acceptance Purchase Facility (BAPF) to ensure that the bankers’ acceptance (BA) market could continue to function well during the financial crisis induced by the COVID‑19 pandemic. We review the impact that the announcement of this facility had on BA yields in the secondary market. We find that BA yield spreads declined by 15 basis points on the day of the announcement and by up to 70 basis points over a longer period. Using an econometric framework, we quantify the effect of the announcement and confirm early assertions presented in the Bank’s 2020 Financial System Review.

Rohan Arora

Sermin Gungor

Kaetlynd McRae

Jonathan Witmer

Content Type(s): Staff analytical notes, Staff research

October 19, 2020

Staff analytical notes

What COVID-19 revealed about the resilience of bond funds

The liquidity management strategies of fund managers, supported by policy measures, have helped bond funds limit the increase in redemptions caused by COVID 19. This avoided further deterioration in liquidity in bond markets. Nevertheless, these funds were left with lower cash buffers, which could make them more vulnerable to additional large redemptions.

Guillaume Ouellet Leblanc

Ryan Shotlander

Content Type(s): Staff analytical notes, Staff research

August 6, 2020

Staff analytical notes

COVID-19 and bond market liquidity: alert, isolation and recovery

The disruption due to COVID-19 reverberated through the bond markets in three phases. In the first phase, dealers met the rising demand for liquidity. In the second, dealers reduced the supply of liquidity, and trading conditions worsened significantly. Finally, the market returned to relative stability following several interventions by the Bank of Canada.

Jean-Sébastien Fontaine

Hayden Ford

Adrian Walton

Content Type(s): Staff analytical notes, Staff research

July 3, 2020

Financial System Hub articles

Bank of Canada contributes to new publications by the Network for Greening the Financial System

As a member of the Central Banks and Supervisors Network for Greening the Financial System (NGFS), the Bank of Canada contributed to three publications that aim to improve global understanding of the impact of climate change on the financial system and world economy.

Content Type(s): Financial System Hub articles, Publications

June 24, 2020

Staff analytical notes

Household indebtedness risks in the wake of COVID‑19

COVID-19 presents challenges for indebted households. We assess these by drawing parallels between pandemics and natural disasters. Taking into account the financial health of the household sector when the pandemic began, we run model simulations to illustrate how payment deferrals and the labour market recovery will affect mortgage defaults.

Olga Bilyk

Anson T. Y. Ho

Mikael Khan

Geneviève Vallée

Content Type(s): Staff analytical notes, Staff research

June 5, 2020

Staff discussion papers

Scenario Analysis and the Economic and Financial Risks from Climate Change

This paper adapts climate-economy models that have been applied in other contexts for use in climate-related scenario analysis. We consider illustrative scenarios for the global economy that could generate economic and financial risks. Our results suggest there are significant economic risks from climate change and the move to a low-carbon economy.

Erik Ens

Craig Johnston

Content Type(s): Staff discussion papers, Staff research

May 19, 2020

Financial Stability Report

Financial System Review Summary—2020

This issue of the Financial System Review focuses on the impact of COVID 19. The pandemic presents an unprecedented shock to the Canadian economy. This report identifies the effects on the Canadian financial system and explains how recent actions by the Bank and other policy-makers are helping to manage them. It further describes how a resilient financial system can help households and businesses smooth the effects of the COVID-19 shock and prepare for a robust recovery.

Stephen S. Poloz

Carolyn A. Wilkins

Timothy Lane

Lawrence L. Schembri

Paul Beaudry

Toni Gravelle

Content Type(s): Financial Stability Report, Publications

May 14, 2020

Financial System Hub articles

COVID-19: Actions to Support the Economy and Financial System

Learn about the economic impact of the COVID-19 pandemic and the Bank’s actions to support the Canadian economy and financial system.

Content Type(s): Financial System Hub articles, Publications

March 24, 2020

Speeches and appearances Speech summaries

Exploring new ways to pay

Deputy Governor Timothy Lane explains how the Bank of Canada is preparing for a future where Canadians may need a digital currency issued by their central bank.

Timothy Lane

Content Type(s): Press, Speech summaries, Speeches and appearances

February 25, 2020

Staff analytical notes

The Cyber Incident Landscape

The Canadian financial system is vulnerable to cyber threats. But for many firms, cyber risk is difficult to quantify. We examine public information on past cyber incidents to better understand the current risk landscape and find that a holistic view is needed to fully grasp the nature of this risk.

Nikil Chande

Dennis Yanchus

Content Type(s): Staff analytical notes, Staff research

December 13, 2019

Speeches and appearances Speech summaries

Financial stability in an uncertain world

Senior Deputy Governor Carolyn A. Wilkins talks about the recent strengthening of Canada’s financial system.

Carolyn A. Wilkins

Content Type(s): Press, Speech summaries, Speeches and appearances

November 19, 2019

The Economy, Plain and Simple

Climate change is a big issue for central banks

Climate change is transforming the economy and financial system

Erik Ens

Adrian Guerin

Content Type(s): Publications, The Economy, Plain and Simple

November 19, 2019

Financial System Survey

Financial System Survey Highlights—November 2019

This article presents the key results from the autumn 2019 Bank of Canada Financial System Survey, conducted September 24 and October 11, 2019. This survey included special questions on climate change risk.

Content Type(s): Financial System Survey, Publications

November 18, 2019

Staff analytical notes

Home Equity Extraction and Household Spending in Canada

We use rich microdata to measure home equity extraction in Canada and track its evolution over time. We find home equity extraction has been rising in recent years and has likely contributed materially to dynamics in household spending.

Anson T. Y. Ho

Mikael Khan

Monica Mow

Brian Peterson

Content Type(s): Staff analytical notes, Staff research

September 20, 2019

Financial System Hub articles

A Resolution Regime for Financial Market Infrastructures

Canada’s most important payment clearing and settlement systems now have a resolution regime. As resolution authority, the Bank of Canada has new powers to protect the stability of the Canadian financial system in the unlikely event an FMI fails.

Content Type(s): Financial System Hub articles, Publications

July 11, 2019

Press releases

Launch of the Canadian Financial Sector Resiliency Group

This new public-private partnership led by the Bank of Canada focuses on the operational resilience of Canada’s critical financial infrastructure. The group will coordinate responses to major operational incidents, including cyber attacks, and plan initiatives to promote resilience.

Content Type(s): Press, Press releases

June 27, 2019

Financial System Hub articles

IMF Financial System Stability Assessment for Canada

The International Monetary Fund’s comprehensive analysis of the Canadian financial system increases awareness and encourages discussion and debate. The IMF consulted with the Bank of Canada and other Canadian authorities, but the report is an independent assessment and does not represent the views of the Bank.

Content Type(s): Financial System Hub articles, Publications

July 11, 2019

Financial Stability Report

Financial System Review Summary—2019

In our Financial System Review, we identify the main vulnerabilities and risks to financial stability in Canada and explain how they have evolved over the past year. This issue reflects the Bank’s judgment that the vulnerabilities associated with high household debt and imbalances in the housing market have declined modestly but remain significant. The Financial System Review is a product of the Governing Council of the Bank of Canada: Stephen S. Poloz, Carolyn A. Wilkins, Timothy Lane, Lawrence Schembri, Lynn Patterson and Paul Beaudry.

Stephen S. Poloz

Carolyn A. Wilkins

Timothy Lane

Lawrence L. Schembri