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Lender of last resort

Read about lender of last resort tools and policy consultations, and browse related policy documents and reference material.

As the ultimate provider of Canadian-dollar liquidity to the financial system, the Bank of Canada has the unique capacity to create Canadian-dollar claims on the central bank and the ability to assume the role of lender of last resort (LLR). The objective of LLR is to prevent or mitigate financial instability through the provision of liquidity support, either to individual financial entities or to financial markets more broadly.


These tools for providing LLR liquidity are part of the Bank’s broader Framework for Market Operations and Liquidity Provision.

Standing Liquidity Facility

By facilitating overnight settlement in the payments system, the Standing Liquidity Facility reinforces monetary policy and facilitates the smooth functioning of the financial system.

Emergency Lending Assistance

The provision of Emergency Lending Assistance is extraordinary and is designed to provide last-resort liquidity to eligible financial institutions or financial market infrastructures that are facing serious liquidity problems.

Extraordinary Market-Wide Liquidity Facilities

Under exceptional circumstances, the Bank can provide extraordinary liquidity on a market-wide basis through its market-wide liquidity facilities.

Policy consultations

Consultations on the Bank of Canada Emergency Lending Policies: Summary and Responses to Comments Received

September 30, 2015

On 5 May 2015, the Bank of Canada published a consultation document entitled “Bank of Canada Emergency Lending Policies.” The consultation period ended on 4 July 2015. This page summarizes the comments received and the Bank of Canada’s responses to those comments.

Bank of Canada Emergency Lending Policies: Consultation Paper

May 5, 2015

The Bank of Canada is updating its emergency lending policies to reflect the evolution of the Canadian financial system and lessons learned globally during the 2007–09 financial crisis. This paper sets out proposed updates to the Bank of Canada’s Emergency Lending Assistance (ELA) policies and is being issued for public consultation. All comments on this consultation paper should be received by 4 July 2015.

Related policy documents

Rules Governing Advances to Financial Institutions

These Rules serve as policy guidelines and administrative procedures for financial institutions and financial market infrastructures seeking to obtain loans (advances) from the Bank of Canada.

Lessons from the Use of Extraordinary Central Bank Liquidity Facilities

May 19, 2011

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.

The Bank of Canada’s Extraordinary Liquidity Policies and Moral Hazard

June 20, 2010

Bank of Canada published a report establishing a set of principles to guide the extraordinary liquidity interventions it was making in response to the systemic shocks buffeting the Canadian financial system. These principles provided a framework for maintaining consistency between the Bank’s actions and its responsibilities as lender of last resort to the financial system, while allowing sufficient fl exibility to respond to the unique challenges of the crisis.

Bank of Canada Liquidity Actions in Response to the Financial Market Turmoil

September 11, 2009

In response to the financial crisis of 2007-09, the Bank of Canada intervened repeatedly to stabilize the financial system and limit the repercussions of the crisis on the Canadian economy. This article reviews the extraordinary liquidity measures taken by the Bank during this period and the principles that guided the Bank's interventions. A preliminary assessment of the term liquidity facilities provided by the Bank suggests that they were an important source of liquidity support for some financial institutions and, on a broader basis, served to reduce uncertainty among market participants about the availability of liquidity, as well as helping to promote a return to well-functioning money markets.

Financial Market Turmoil and Central Bank Intervention

June 21, 2008

In this article, we consider central bank intervention to address financial market turmoil with a focus on the questions of why, when, and how a central bank might intervene. We set out a policy framework and identify appropriate central bank instruments to respond to extraordinary financial market turmoil, consistent with central bank policy goals and functions.