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The collateral policy of central banks played a critical role during the recent financial crisis, as they worked to bolster liquidity and alleviate the funding pressures facing financial institutions. This article examines central bank collateral policy and discusses three areas in which central banks can use their collateral policy to influence financial market practices: promoting greater transparency for securitized products, improving practices related to credit risk, and reducing procyclicality in the management of market risk.

This newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

The Canadian and global economies are evolving essentially in line with the Bank’s expectations.

This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

The current monetary policy framework of the Fed intends to be more ’inclusive’ by running the economy hot for longer during expansions.

Canada has not been alone in making substantial progress towards price stability. Average inflation in the industrialized countries fell markedly in the first half of the 1990s, the third such episode of broad-based disinflation in the last 20 years. By the latter part of 1994, inflation in many countries had fallen to rates that had not been sustained since the early 1960s, generally converging to within a range of 1 to 3 per cent. Despite the decline in inflation to similar low levels, there were a number of interesting developments across the industrialized countries. For example, the pace of disinflation slowed noticeably after 1992 despite continued weak demand conditions. Inflation in countries that experienced a sharp depreciation in their exchange rates in the first half of the 1990s was, on average, no higher than elsewhere. The author identifies various factors affecting inflation outcomes in the industrialized countries. These include special factors, such as changes to indirect taxes, as well as more fundamental determinants of inflation, including the degree of economic slack. The presence of these factors, and perhaps the way in which inflation responded to them, varied across countries. One common element, however, was an increased commitment by monetary authorities across the industrialized economies to the goal of achieving and maintaining price stability.

Governor Mark Carney discusses the impact of high commodity prices for the Canadian economy.

In this article, author Charles Spencer reviews the complex process of developing the new series, which represents a dramatic change for Canada. The leading-edge security features made possible by the new substrate, the cost savings of the move to a polymer base and the environmental advantages of the new notes are also examined.

Canadian exports have often disappointed since the Great Recession. The apparent disconnect between exports and the Bank of Canada’s current measure of foreign demand has created an impetus to search for an alternative.

A trade surplus and a trade deficit are both measures of a country’s balance of trade. They are a calculation of whether a country exports or imports more.