Tariffs and the Exchange Rate: Evidence from Twitter Staff working paper 2021-36 Dmitry Matveev, Francisco Ruge-Murcia Do tariffs affect exchange rates? We look at President Trump’s tweets during talks on the North American Free Trade Agreement and find that anticipation of higher tariffs on imports from Canada and Mexico led to an appreciation of the US dollar relative to Canadian and Mexican currency. Content Type(s): Staff research, Staff working papers JEL Code(s): F, F1, F13, F3, F31 Research Theme(s): Financial markets and funds management, International markets and currencies, Structural challenges, International trade, finance and competitiveness
July 21, 2021 Sharon Kozicki appointed as Deputy Governor of the Bank of Canada Media Relations Ottawa, Ontario The Board of Directors of the Bank of Canada today announced the appointment of Sharon Kozicki as Deputy Governor, effective August 2, 2021. Content Type(s): Press, Press releases
July 20, 2021 Bank of Canada announces changes to its Standing Liquidity Facility Collateral Policy To provide support for the upcoming introduction of the Lynx payment system, the Bank of Canada is announcing changes to the Standing Liquidity Facility (SLF) Collateral Policy that will be effective July 26, 2021. Content Type(s): Press, Market notices Source(s): Standing Liquidity Facility
The Positive Case for a CBDC Staff discussion paper 2021-11 Andrew Usher, Edona Reshidi, Francisco Rivadeneyra, Scott Hendry We discuss the competition and innovation arguments for issuing a central bank digital currency (CBDC). A CBDC could be an effective competition policy tool for payments. A CBDC could also support the vibrancy of the digital economy. It could help solve market failures and foster competition and innovation in new digital payments markets. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E4, E42, E5, E58, L, L4, L5 Research Theme(s): Financial system, Financial stability and systemic risk, Money and payments, Digital assets and fintech, Payment and financial market infrastructures, Retail payments
Exploring the potential benefits of inflation overshooting Staff analytical note 2021-16 Robert Amano, Marc-André Gosselin, Kurt See After a period with the interest rate at the effective lower bound, temporarily overshooting inflation may offer important economic benefits. This may be especially true for vulnerable segments of the population, such as workers with low attachment to the labour force and the long-term unemployed. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E3, E31, E5, E52, J, J2, J20 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Real economy and forecasting
Stressed but not Helpless: Strategic Behaviour of Banks Under Adverse Market Conditions Staff working paper 2021-35 Grzegorz Halaj, Sofia Priazhkina Our stress-testing tool considers banks under stress that can strategically manage their balance sheets. Using confidential Canadian supervisory data, we assess whether bank behaviour to maximize shareholder value can amplify a hypothetical stress scenario. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C6, C63, C7, C72, G, G2, G21 Research Theme(s): Financial system, Financial institutions and intermediation, Financial stability and systemic risk, Models and tools, Economic models, Monetary policy, Monetary policy tools and implementation
Sequencing Extended Monetary Policies at the Effective Lower Bound Staff discussion paper 2021-10 Yang Zhang, Lena Suchanek, Jonathan Swarbrick, Joel Wagner, Tudor Schlanger In this analysis, we use simulations in the Bank of Canada’s projection model—the Terms-of-Trade Economic Model—to consider a suite of extended monetary policies to support the economy following the COVID-19 crisis. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E3, E4, E5, E52, E58 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy tools and implementation