How will mortgage payments change at renewal? An updated analysis Staff Analytical Note 2025-21 Claudia Godbout, Adam Su, Yang Xu We update an assessment of potential changes in payments that mortgage holders could face at renewal in 2025 and 2026. We use an enhanced dataset (RESL2) that provides a more accurate starting point for mortgage balances. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Credit and credit aggregates, Financial institutions, Financial stability, Housing, Interest rates, Recent economic and financial developments JEL Code(s): D, D1, D12, D14, G, G2, G21, G28, R, R2, R20
The impact of trading flows on Government of Canada bond prices Staff Analytical Note 2025-20 Andreas Uthemann, Rishi Vala, Jun Yang Trading flows affect Government of Canada bond prices. Our estimates suggest a sale of 1% of the available supply of bonds typically lowers bond prices by 0.2%. From 2000 to 2025, demand from institutional investors, such as Canadian pension funds and foreign investors, explains 69% of quarterly price variation, with the remainder explained by changes in the supply of bonds. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Asset pricing, Debt management, Econometric and statistical methods, Financial institutions, Financial markets, Financial stability, Market structure and pricing, Sectoral balance sheet JEL Code(s): C, C0, C01, C3, C36, C5, C58, D, D5, D53, E, E6, E62, G, G1, G11, G12, G2, G23
Non-bank financial intermediation: Canada’s submission to the 2024 global monitoring report Staff Analytical Note 2025-19 Elba Gomez Navas Acevedo, Thomas Thorn We share insights about non-bank financial intermediation in Canada in 2023. These data were collected as part of the Bank of Canada’s contribution to the Financial Stability Board’s Global Monitoring Report on Non-Bank Financial Intermediation. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Financial institutions, Sectoral balance sheet JEL Code(s): G, G2, G21, G22, G23
Examining the Links Between Firm Performance and Insolvency Staff Discussion Paper 2025-10 Dylan Hogg, Hossein Hosseini Jebeli Assessing insolvency dynamics is essential for evaluating the financial health of non-financial corporations and mitigating macroeconomic and financial stability risks. This study leverages a newly created Statistics Canada dataset linking insolvency records with firm-level financial data to develop a robust framework for monitoring insolvency risk Content Type(s): Staff research, Staff discussion papers Research Topic(s): Credit and credit aggregates, Econometric and statistical methods, Financial stability, Firm dynamics JEL Code(s): D, D2, D22, G, G3, G33, L, L2, L20
The Optimum Quantity of Central Bank Reserves Staff Working Paper 2025-15 Jonathan Witmer This paper analyzes the optimal quantity of central bank reserves in an economy where reserves and other financial assets provide liquidity benefits. Using a static model, I derive a constrained Friedman rule that characterizes the socially optimal level of reserves, demonstrating that this quantity is neither necessarily large nor small but depends on the marginal benefits of reserves relative to alternative safe assets. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial markets, Financial system regulation and policies, Monetary policy implementation JEL Code(s): E, E4, E41, E42, E5, E58, G, G2, G21, G28
Are Hedge Funds a Hedge for Increasing Government Debt Issuance? Staff Discussion Paper 2025-7 Adam Epp, Jeffrey Gao This paper studies the rapid increase since 2019 of Government of Canada (GoC) debt issuance alongside greater hedge fund participation at GoC bond auctions. We find a systematic relationship between GoC debt stock and hedge fund bidding shares at auction. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Debt management, Financial institutions, Financial markets, Financial stability JEL Code(s): D, D4, D44, G, G1, G12, G2, G23, H, H6, H63
Liquidation Mechanisms and Price Impacts in DeFi Staff Working Paper 2025-12 Phoebe Tian, Yu Zhu This paper theoretically and empirically examines the price impacts of liquidations in DeFi and how different liquidation mechanisms affect the price impacts. Content Type(s): Staff research, Staff working papers Research Topic(s): Digital currencies and fintech JEL Code(s): D, D4, D44, D47, G, G2, G20, G3, G33
Risk-Free Uncollateralized Lending in Decentralized Markets: An Introduction to Flash Loans Staff Discussion Paper 2025-6 Jack Mandin A flash loan is a special type of uncollateralized loan with zero default risk. I document the use for flash loans across major blockchains that are Ethereum-Virtual-Machine-compatible. Flash loans expand access to liquidity, and highly sophisticated actors use them for many practical applications. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Digital currencies and fintech, Financial markets JEL Code(s): G, G0, G1, G2
March 17, 2025 Will asset managers dash for cash? A summary of the implications for central banks David Cimon, Jean-Philippe Dion, Jean-Sébastien Fontaine, Jabir Sandhu We consider ways central banks could adapt in the event of an increased risk of a dash for cash from asset managers. We explore ideas such as new facilities that ease asset managers’ ability to convert existing assets to cash or new assets with liquidity that central banks would guarantee. Content Type(s): Publications, Financial System Hub articles Research Topic(s): Central bank research, Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial stability, Financial system regulation and policies JEL Code(s): E, E5, E58, G, G0, G00, G01, G1, G2
Will Asset Managers Dash for Cash? Implications for Central Banks Staff Discussion Paper 2025-5 David Cimon, Jean-Philippe Dion, Jean-Sébastien Fontaine, Jabir Sandhu We consider ways central banks could adapt in the event of an increased risk of a dash for cash from asset managers. We explore ideas such as new facilities that ease asset managers’ ability to convert existing assets to cash or new assets with liquidity that central banks would guarantee. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial stability, Financial system regulation and policies JEL Code(s): E, E5, E58, G, G0, G00, G01, G1, G2