G - Financial Economics

• Uncovering the use of haircuts in the Canadian repo market

  Staff analytical paper 2026-39 Sadia Anum, Jabir Sandhu, Adrian Walton

  We show that haircuts are rarely used in the Canadian dealer-to-client repo market and their usage did not increase materially during past stress events. Usage is concentrated among wealth managers and some foreign official institutions, likely reflecting regulatory or internal requirements.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): G, G0, G01, G1, G18, G2, G23, G28 Research Theme(s): Financial markets and funds management, Market structure, Financial system, Financial institutions and intermediation, Financial stability and systemic risk, Financial system regulation and oversight

• Tracking Heterogeneous Spending Patterns with Credit Card Microdata

  Staff analytical paper 2026-38 Jia Qi Xiao, Jackson Reid, Joey Daniels

  We present a measure of account-level credit card spending constructed using credit bureau microdata, capturing monthly spending for approximately 80% of adults in Canada. Our measure offers higher frequency than other publicly available consumption metrics, and can be disaggregated by age, geographic location and credit history.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): C, C5, C55, C8, C81, D, D1, D14, E, E2, E21, E3, E32, G, G5, G51 Research Theme(s): Financial system, Financial stability and systemic risk, Financial system regulation and oversight, Household and business credit, Monetary policy, Real economy and forecasting

• Non-bank financial intermediation: Canada’s submission to the 2025 global monitoring report

  Staff analytical paper 2026-37 Thomas Thorn, Sylvia Xie

  We share insights about non-bank financial intermediation in Canada in 2024. These data were collected as part of the Bank of Canada’s contribution to the Financial Stability Board’s Global Monitoring Report on Non-Bank Financial Intermediation.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): G, G2, G21, G22, G23 Research Theme(s): Financial markets and funds management, Market structure, Financial system, Financial institutions and intermediation, Financial stability and systemic risk

• From Stress to Strategy: How Banks Balance the Scales

  Staff working paper 2026-26 Ruben Hipp, Javier Ojea Ferreiro

  This paper develops a stress-testing framework in which banks strategically adjust their balance sheets in response to regulatory constraints and market conditions. Applied to Canada’s largest banks, it quantifies the effects of macroprudential policies on lending and identifies systemic vulnerabilities through reverse stress testing.

  Content Type(s): Staff research, Staff working papers JEL Code(s): C, C6, C63, C7, C73, G, G2, G21, G3, G32, H, H1, H12 Research Theme(s): Financial system, Financial institutions and intermediation, Financial stability and systemic risk, Models and tools, Economic models

• Time-Inconsistent Manager Incentives and Capital Formation

  Staff working paper 2026-25 José-Víctor Ríos-Rull, Josef Schroth, Tamon Takamura, Yaz Terajima

  In a dynamic model with limited commitment, aggregate payout-based compensation induces managers to raise outside equity yet invest too little today. Per-share compensation eliminates the dilution motive and restores efficient investment, but it does so through slower capital accumulation that better protects incumbent shareholder value.

  Content Type(s): Staff research, Staff working papers JEL Code(s): G, G3, G32, G34, J, J3, J33 Research Theme(s): Financial markets and funds management, Market functioning, Models and tools, Economic models

• The Boundaries of Bank Funding: The Case of Canadian Cash ETFs

  Staff analytical paper 2026-32 Jean-Sébastien Fontaine, Vincent Meh, Jayden Plener

  The rise and transformation of Canadian cash ETFs highlight that banking liquidity regulation affects more than bank resilience. By changing the relative attractiveness of deposits and securities, it can shape where asset managers allocate their cash across the financial system.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E4, E44, G, G1, G11, G18, G2, G23, G28 Research Theme(s): Financial markets and funds management, Funds management, Financial system, Financial institutions and intermediation

• Central Clearing in Repo Markets: Do the Benefits Extend to Non-Dealers?

  Staff analytical paper 2026-31 Danny Auger, Adrian Walton

  This note examines whether central clearing of repos benefits non-dealer participants in Canadian fixed-income markets. While prior research highlights lower funding and balance-sheet costs for dealers, less is known about client effects. Understanding these broader implications is important for assessing central clearing’s contribution to market efficiency and resilience.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E4, E44, G, G1, G12, G2, G21, G23 Research Theme(s): Financial markets and funds management, Market structure

• Data Externalities, Market Power, and the Optimal Design of Central Bank Digital Currencies

  Staff working paper 2026-21 Yuteng Cheng, Jonathan Chiu, Mohammad Davoodalhosseini, Janet Hua Jiang

  This paper studies how a central bank should design a CBDC when private payment providers collect and monetize transaction data. It characterizes the optimal CBDC’s pricing and data policy, and shows how its effects on private payment use and total data depend on market power and data externalities.

  Content Type(s): Staff research, Staff working papers JEL Code(s): G, G2, L, L1, L14 Research Theme(s): Money and payments, Digital assets and fintech, Payment and financial market infrastructures, Retail payments

• The Impact of Potential Retail Central Bank Digital Currency on the Canadian Financial System During a Severe Recession

  Staff analytical paper 2026-30 Sofia Priazhkina

  This policy note examines how a non-interest-bearing retail central bank digital currency (CBDC) could affect the financial stability of Canada’s systemically important banks during a severe recession. Stress test results show that the banks remain resilient, maintaining key regulatory ratios even under high CBDC demand.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E4, E44, E5, E58, E6, E61, G, G0, G01, G2, G21, G28 Research Theme(s): Financial system, Financial stability and systemic risk, Models and tools, Economic models, Money and payments, Digital assets and fintech, Structural challenges, Digitalization and productivity

• Banking Competition and Access to Cash and Retail Banking Services in Rural Canada

  Staff working paper 2026-19 Hongyu Xiao, Robert Petrunia, Sarah Lucky

  We study access to Canadian retail banking and cash services in rural, localized markets using the Bresnahan-Reiss entry threshold framework. We find that the first retail banking services branch entry requires about 500 residents in an average market, whereas the first cash services location requires about 80 residents.

  Content Type(s): Staff research, Staff working papers JEL Code(s): D, D1, D14, G, G2, G21, L, L1, L10, L13 Research Theme(s): Financial system, Financial institutions and intermediation, Financial system regulation and oversight, Money and payments, Cash and bank notes