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Canada’s financial system has functioned well through a challenging year. Households and businesses remain in stable financial condition, and banks have strengthened their capacity to absorb shocks. However, vulnerabilities have increased in some parts of the system, and a more turbulent global environment poses risks to financial stability.

Overall, Canadian households have proven resilient. But debt levels are elevated, and some pockets of stress remain. The potential impact on employment from ongoing trade uncertainty and geopolitical conflicts is a key concern.

Hedge funds have continued to increase their repo borrowing. While their activity supports market efficiency and liquidity, it could leave fixed‑income markets more vulnerable to the risk of a sudden sell‑off.

10:00 (ET)
An assessment of potential risks to the stability of Canada's financial system. The Governor and Senior Deputy Governor will hold a press conference at 11:00 to discuss the contents of the Report.

Canada’s large banks have grown more resilient. They remain well positioned to support the economy and the financial system even if conditions deteriorate.

Globally, private credit lending has expanded rapidly and become increasingly connected to the broader financial system. Complex structures, limited transparency and the fact that private credit is untested in a downturn make it difficult to predict how the sector might amplify shocks.

The Financial Stability Report will be released on Thursday, May 28, 2026.

The war in the Middle East has led to periods of increased volatility and reduced liquidity in certain markets, particularly in energy. Nevertheless, markets have generally remained resilient. Equity valuations are still elevated, and credit spreads are compressed.

Canada’s financial system has continued to function well despite US tariffs and trade uncertainty. But a more turbulent global environment poses risks to financial stability, particularly if several vulnerabilities crystalize at the same time.

The Bank of Canada announced today it is joining the Bank for International Settlements’ Project Agorá, an initiative exploring how tokenization could improve wholesale cross-border payments.