On this page we showcase our latest research and analysis, conferences and partnerships with researchers outside the Bank.
About the FSRC
The FSRC will advance high-quality financial system research in Canada to inform policy and improve the economic and financial well-being of Canadians. The Centre showcases the Bank’s latest financial system research and analysis, helping us to build partnerships with researchers outside the Bank. We will also host an annual conference highlighting financial system research from Canada and around the world, including our own research and the results of our joint research ventures.
Research
Our goal is to advance the understanding of the structure, function and evolution of the Canadian financial system. This is essential to the core functions of the Bank. Our in-depth research helps identify risks and shapes policy by addressing issues in financial markets, banking, payments systems and other matters in the financial system.
Explaining the Interplay Between Merchant Acceptance and Consumer Adoption in Two-Sided Markets for Payment Methods
While consumers and merchants have access to a growing number of payment methods, the use of cash for point-of-sale (POS) transactions has decreased. Our paper studies the interaction between consumers and merchants to explain observed trends in the usage of cash and other payment methods at the POS.
Kim Huynh
Gradon Nicholls
Oleksandr Shcherbakov
Financial Frictions, Durable Goods and Monetary Policy
Contrary to data analysis, dynamic stochastic general equilibrium models with durables predict that when monetary policy tightens, non-durable consumption falls and durable consumption rises. We find that the presence of both loan-to-value and payment-to-income constraints can resolve this inconsistency and lead to a monetary policy response consistent with the data.
Ugochi Emenogu
Leo Michelis
Flight from Safety: How a Change to the Deposit Insurance Limit Affects Households’ Portfolio Allocation
A more generous deposit insurance policy could lead to an outflow of deposits from the banking sector. We offer a theoretical rationale for this surprising outcome and provide supporting empirical evidence using the 2005 limit increase for deposit insurance in Canada.
H. Evren Damar
Reint Gropp
Adi Mordel
Tail Index Estimation: Quantile-Driven Threshold Selection
The choice of the start of a tail is crucial to precisely determining the likelihood that a tail event will occur. We use a modified Kolmogorov-Smirnov statistic to find the start of the tail. We show that application of our informed threshold can change the empirical results of previous research.
Jon Danielsson
Lerby Ergun
Laurens de Haan
Casper G. de Vries
Are Long-Horizon Expectations (De-)Stabilizing? Theory and Experiments
In our theoretical model, participants in financial markets learn how to form expectations of future asset prices over finite horizons and trade accordingly. Shorter horizons lead to more volatility and asset price deviations from fundamentals. We confirm our model’s predictions in a laboratory experiment with human subjects as traders.
George Evans
Cars Hommes
Bruce McGough
Isabelle Salle
What Explains Month-End Funding Pressure in Canada?
Recent tightness in US repo markets makes it useful to analyze the historical signs of funding pressure around month-end periods in the Canadian overnight repo market. This paper finds that market participants place a premium on liquidity around month-end periods. This is due to the confluence of a generalized liquidity preference, heightened month-end forecast uncertainty and resultant search frictions in the repo market.
Christopher S. Sutherland
Conferences
We regularly bring together researchers from academic and policy institutions at conferences that discuss financial system relevant topics such as banking regulation, housing markets, retail payments, and the next generation of central bank models.
Conference on the Economics of Central Bank Digital Currency
This two-day conference, jointly organized by the Bank of Canada and Sveriges Riksbank, was held in Ottawa, Ontario. The event provided a forum for central bankers and academic researchers to discuss arguments for and against the issuance of central bank digital currencies.
October 17, 2019
Joint Macroeconomic Workshop in Tokyo
The Bank of Canada, together with the Bank of Japan and the Federal Reserve Bank of Philadelphia, held the first joint workshop on macroeconomic issues for central banks. Participants discussed household inequality, labour-market dynamics, and monetary and fiscal policy.
September 27, 2019
Financial System Research Centre Macrofinance Workshop
The Bank of Canada’s Financial Research Centre hosted its second annual conference on macrofinance this past September. Top Canadian and international researchers discussed issues related to housing markets, pricing of risk, banking policies and regulations, and policy interactions.
September 23, 2019
External Partnerships
We value research partnerships and offer opportunities for experienced and promising researchers in a variety of fields.