Financial System Hub

Promoting a stable and efficient financial system

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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
Toni Gravelle
November 23, 2020

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
Geneviève Vallée
November 23, 2020

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.
November 20, 2020

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
Rohan Arora
Sermin Gungor
Sermin Gungor
Kaetlynd McRae
Kaetlynd McRae
Jonathan Witmer
Jonathan Witmer
October 19, 2020

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
Guillaume Ouellet Leblanc
Ryan Shotlander
Ryan Shotlander
August 6, 2020

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
Jean-Sébastien Fontaine
Hayden Ford
Hayden Ford
Adrian Walton
Adrian Walton
July 3, 2020

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.
June 24, 2020

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
Olga Bilyk
Anson T. Y. Ho
Anson T. Y. Ho
Mikael Khan
Mikael Khan
Geneviève Vallée
Geneviève Vallée
June 5, 2020

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
Erik Ens
Craig Johnston
Craig Johnston
May 19, 2020

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
Stephen S. Poloz
Carolyn A. Wilkins
Carolyn A. Wilkins
Timothy Lane
Timothy Lane
Lawrence L. Schembri
Lawrence L. Schembri
Paul Beaudry
Paul Beaudry
Toni Gravelle
Toni Gravelle
May 14, 2020

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.
March 24, 2020

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
Timothy Lane
February 25, 2020

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
Nikil Chande
Dennis Yanchus
Dennis Yanchus
December 13, 2019

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
Carolyn A. Wilkins
November 19, 2019

Climate change Is a big issue for central banks

Climate change is transforming the economy and financial system
Erik Ens
Erik Ens
Adrian Guerin
Adrian Guerin
November 19, 2019

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.
November 18, 2019

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
Anson T. Y. Ho
Mikael Khan
Mikael Khan
Monica Mow
Monica Mow
Brian Peterson
Brian Peterson
September 20, 2019

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.
July 11, 2019

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.
June 27, 2019

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.
July 11, 2019

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
Stephen S. Poloz
Carolyn A. Wilkins
Carolyn A. Wilkins
Timothy Lane
Timothy Lane
Lawrence L. Schembri
Lawrence L. Schembri
Lynn Patterson
Lynn Patterson
Paul Beaudry
Paul Beaudry
May 16, 2019

Assessing the Resilience of the Canadian Banking System

The stability of the Canadian financial system, as well as its ability to support the Canadian economy, depends on the ability of financial institutions to absorb and manage major shocks. This is especially true for large banks, which perform services essential to the Canadian economy.
Charles Gaa
Charles Gaa
Xuezhi Liu
Xuezhi Liu
Cameron MacDonald
Cameron MacDonald
Xiangjin Shen
Xiangjin Shen
May 16, 2019

Financial System Survey Highlights—May 2019

This article presents the key results from the spring 2019 Bank of Canada Financial System Survey, conducted March 11 and March 29, 2019. This survey included a special question on cyber risk.
May 7, 2019

Could Canadian Bond Funds Add Stress to the Financial System?

We create a hypothetical scenario to study the role bond funds play in intensifying shocks to the financial system. Using data from 2018 and 2007, we find that bond funds play a larger role now than they did in the past.
Rohan Arora
Rohan Arora
Guillaume Bédard-Pagé
Guillaume Bédard-Pagé
Guillaume Ouellet Leblanc
Guillaume Ouellet Leblanc
Ryan Shotlander
Ryan Shotlander
April 15, 2019

Non-Bank Financial Intermediation in Canada: An Update

Non-bank financial intermediation provides a valuable alternative to traditional banking. We provide an update on the Bank’s monitoring of this area, including insights obtained from new data sources.
Guillaume Bédard-Pagé
Guillaume Bédard-Pagé
March 22, 2019

A Perspective on Crypto “Money”

From a central banking perspective, the monetary landscape 10 to 15 years from now could look radically different than it does today. This paper explores some important research and policy questions for a central bank regarding cryptoassets.
James Chapman
James Chapman
Carolyn A. Wilkins
Carolyn A. Wilkins
February 6, 2019

Price Caps in Canadian Bond Borrowing Markets

Price controls, or caps, can lead to shortages, as 1970’s gasoline price controls illustrate. One million trades show that the market for borrowing bonds in Canada has an implicit price cap: traders are willing to pay no more than the overnight interest rate to borrow a bond. This suggests the probability of a shortage increases when interest rates are very low.
Léanne Berger-Soucy
Léanne Berger-Soucy
Jean-Sébastien Fontaine
Jean-Sébastien Fontaine
Adrian Walton
Adrian Walton
January 14, 2019

Governor Poloz speaks on financial vulnerabilities and risks to the economy

In his final speech of 2018, Governor Stephen S. Poloz discusses the vulnerabilities and risks in Canada’s financial system as well as Canadian and global economic developments. He explains how all this was taken into account in the December interest rate decision.
Stephen S. Poloz
Stephen S. Poloz
December 6, 2018

The Impact of Recent Policy Changes on the Canadian Mortgage Market

Recent policy changes are having a clear impact on the mortgage market. The number of new, highly indebted borrowers has fallen, and overall mortgage activity has slowed significantly.
Olga Bilyk
Olga Bilyk
Maria teNyenhuis
Maria teNyenhuis
November 14, 2018

Financial System Survey Highlights—November 2018

This article presents the key results from the autumn 2018 Bank of Canada Financial System Survey, conducted between September 24 and October 12, 2018. The survey collects expert opinions from financial system experts on the risks to, and resilience of, the Canadian financial system.
November 14, 2018

Financial System Resilience and House Price Corrections

We use models to better understand and assess how risks could affect the financial system. In our hypothetical scenario, a house price correction and elevated financial stress weigh on the economy. An increased number of households and businesses have difficulty repaying loans. Nonetheless, the large banks remain resilient.
Thibaut Duprey
Thibaut Duprey
Xuezhi Liu
Xuezhi Liu
Cameron MacDonald
Cameron MacDonald
Maarten van Oordt
Maarten van Oordt
Sofia Priazhkina
Sofia Priazhkina
Xiangjin Shen
Xiangjin Shen
Joshua Slive
Joshua Slive
Virginie Traclet
Virginie Traclet
November 14, 2018

Keeping the financial system healthy

We are all better off if the financial system can weather a storm or two. And every one of us plays a role in keeping it that way.
Joshua Slive
Joshua Slive
Donald Coletti
Donald Coletti
October 16, 2018

Financial System Review: Assessment of Vulnerabilities and Risks—June 2018

This issue of the Financial System Review reflects the Bank’s judgment that high household indebtedness and housing market imbalances remain the most important vulnerabilities. While these vulnerabilities remain elevated, policy measures continue to improve the resilience of the financial system. A third vulnerability highlighted in the FSR concerns cyber threats to an interconnected financial system.
June 7, 2018

Financial System Research Centre

The FSRC promotes financial system research in Canada to inform policy and improve the economic and financial well-being of Canadians.
November 14, 2018