The Bank of Canada is pleased to announce Professor Daniel Trefler from the Rotman School of Management at the University of Toronto and Professor Francesco Trebbi from the University of British Columbia’s Vancouver School of Economics as the 2016 recipients of the Bank’s Fellowship Award.
We model the asset-opacity choice of an intermediary subject to rollover risk in wholesale funding markets. Greater opacity means investors form more dispersed beliefs about an intermediary’s profitability.
In this piece we show that a limit on the level of asset encumbrance and minimum capital requirements are effective tools for minimizing the incentive for banks to take excessive risk.
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/2 per cent. The Bank Rate is correspondingly 3/4 per cent and the deposit rate is 1/4 per cent.