Laura Zhao is currently a principal economist in the Financial Stability Department at the Bank of Canada. She is a macroeconomist and has conducted research on productivity, firm dynamics, financial stability, and fintech.
Prior to joining the Bank of Canada, Laura worked in the investment banking divisions of Merrill Lynch and Barclays Capital in Hong Kong. During her time there, she assisted global banks and insurance companies with their asset/liability and capital management strategies. She also had a short span at the Asian Development Bank, where she conducted research on global liquidity issues.
Laura obtained her PhD in economics from the University of Maryland. She also holds an MPhil from the Hong Kong University of Science and Technology and a BSc from Peking University.
Canadians usually pay their mortgages on time. But some fall behind on mortgage payments. Before they do, homeowners often increase their use of credit cards and lines of credit, and then fall behind on those payments.
Analyzing TransUnion data from 2015–2024, this study identifies a systematic timeline of distress where rising credit utilization and non-mortgage arrears precede mortgage delinquency by up to two years. This deterioration intensifies in the final six months, providing a robust suite of high-frequency indicators for monitoring emerging household stress.
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.
What risks could stablecoins pose to the financial system? We argue that the stabilization mechanisms of stablecoins give rise to the risk of confidence runs, which can propagate to broader cryptoasset markets and the traditional financial sector. We also argue that stablecoins can contribute to financial stability risks by facilitating the buildup of leverage and liquidity mismatch in decentralized finance. Such risks cannot be addressed by ensuring the price stability of stablecoins alone. Finally, we explore the potential implications of stablecoins for the current system of bank-intermediated credit and for monetary policy.
