Household indebtedness risks in the wake of COVID‑19 Staff analytical note 2020-8 Olga Bilyk, Anson T. Y. Ho, Mikael Khan, Geneviève Vallée COVID-19 presents challenges for indebted households. We assess these by drawing parallels between pandemics and natural disasters. Taking into account the financial health of the household sector when the pandemic began, we run model simulations to illustrate how payment deferrals and the labour market recovery will affect mortgage defaults. Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C2, C21, D, D1, D12, D14, E, E2, E24, E27, E6, E62, G, G2, G21, G28, R, R2 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit, Monetary policy, Real economy and forecasting
Assessment of Liquidity Creation in the Canadian Banking System Staff analytical note 2019-30 Annika Gnann, Sahika Kaya Liquidity creation is a fundamental function of banks. It provides the public with easy access to funds. These funds are important because they allow households and businesses to consume and invest. In this note, we measure liquidity creation by Canadian financial institutions from the first quarter of 2012 to the second quarter of 2019, using a methodology suggested by Berger and Bouwman (2009) and known as the BB measure. Content Type(s): Staff research, Staff analytical notes JEL Code(s): G, G2, G21, G28, G3, G32 Research Theme(s): Financial system, Financial institutions and intermediation, Financial stability and systemic risk
October 1, 2018 Decrypting “Crypto” Remarks Timothy Lane Haskayne School of Business - University of Calgary Calgary, Alberta Deputy Governor Timothy Lane discusses the Bank of Canada’s research and responses to public interest in cryptocurrencies. Content Type(s): Press, Speeches and appearances, Remarks Subject(s): Currency, Bank notes, Digital currency, Financial system, Financial stability, Fintech
Windfall Income Shocks with Finite Planning Horizons Staff working paper 2022-40 Michael Boutros How do households respond when they receive unanticipated income, such as an inheritance or government stimulus cheque? This paper studies these windfall income shocks through a model of household behaviour that generates a realistic consumption response for households along the entire distribution of wealth. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D9, D91, E, E2, E21, G, G5, G51 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission
What Does Structural Analysis of the External Finance Premium Say About Financial Frictions? Staff working paper 2019-38 Jelena Zivanovic I use a structural vector autoregression (SVAR) with sign restrictions to provide conditional evidence on the behavior of the US external finance premium (EFP). The results indicate that the excess bond premium, a proxy for the EFP, reacts countercyclically to supply and monetary policy shocks and procyclically to demand shocks. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E32, E4, E44 Research Theme(s): Financial system, Financial institutions and intermediation, Financial stability and systemic risk, Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission
March 11, 2010 Principles for Interesting Times Remarks Mark Carney Carleton University Ottawa, Ontario I would like to thank students from universities across Canada for joining me on this special day, the 75th anniversary of the Bank of Canada Content Type(s): Press, Speeches and appearances, Remarks
Strategic Uncertainty in Financial Markets: Evidence from a Consensus Pricing Service Staff working paper 2020-55 Lerby Ergun, Andreas Uthemann We look at the informational content of consensus pricing in opaque over-the-counter markets. We show that the availability of price data informs participants mainly about other participants’ valuations, rather than about the value of a financial security. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C58, D, D5, D53, D8, D83, G, G1, G12, G14 Research Theme(s): Financial markets and funds management, Market functioning, Market structure
What Is Restraining Non-Energy Export Growth? Staff analytical note 2018-25 Dany Brouillette, José Dorich, Chris D'Souza, Adrienne Gagnon, Claudia Godbout This note summarizes the key findings from Bank of Canada staff analytical work examining the reasons for the recent weakness in Canadian non-energy exports. Canada steadily lost market share in US non-energy imports between 2002 and 2017, mostly reflecting continued and broad-based competitiveness losses. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E5, E52, F, F1, F10, F14, F17 Research Theme(s): Monetary policy, Real economy and forecasting, Structural challenges, International trade, finance and competitiveness
November 15, 2012 Monetary Policy and the Risk-Taking Channel: Insights from the Lending Behaviour of Banks Bank of Canada Review - Autumn 2012 Teodora Paligorova, Jesus Sierra The financial crisis of 2007-09 and the subsequent extended period of historically low real interest rates have revived the question of whether economic agents are willing to take on more risk when interest rates remain low for a prolonged time period. This increased appetite for risk, which causes economic agents to search for investment assets and strategies that generate higher investment returns, has been called the risk-taking channel of monetary policy. Recent academic research on banks suggests that lending policies in times of low interest rates can be consistent with the existence of a risk-taking channel of monetary policy in Europe, South America, the United States and Canada. Specifically, studies find that the terms of loans to risky borrowers become less stringent in periods of low interest rates. This risk-taking channel may amplify the effects of traditional transmission mechanisms, resulting in the creation of excessive credit. Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): E, E5, E58, G, G2, G21
December 8, 2015 Prudent Preparation: The Evolution of Unconventional Monetary Policies Remarks Stephen S. Poloz The Empire Club of Canada Toronto, Ontario Governor Poloz speaks about the Bank’s updated framework for unconventional monetary policies. Content Type(s): Press, Speeches and appearances, Remarks