November 16, 2017 An Initial Assessment of Changes to the Bank of Canada’s Framework for Market Operations Bank of Canada Review - Autumn 2017 Kaetlynd McRae, Sean Durr, David Manzo The Bank of Canada made changes to several of the tools that make up its framework for operations and liquidity provision. These changes came about after a comprehensive re-view of the framework and are designed to help the Bank better achieve its objectives of reinforcing the target for the overnight rate and supporting the well-functioning of Cana-dian financial markets under normal market conditions. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, Financial stability, Monetary policy framework, Monetary policy implementation, Monetary policy transmission, Payment clearing and settlement systems JEL Code(s): E, E4, E42, E44, E5, E52, E58, G, G0, G01, G1, G18
Fintech: Is This Time Different? A Framework for Assessing Risks and Opportunities for Central Banks Staff Discussion Paper 2017-10 Meyer Aaron, Francisco Rivadeneyra, Samantha Sohal We investigate the risks and opportunities to the mandates of central banks arising from fintech developments. Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Digital currencies and fintech, Financial institutions, Payment clearing and settlement systems JEL Code(s): E, E4, E42, G, G1, G2, L, L1
Monetary Policy Implementation in a Negative Rate Environment Staff Working Paper 2017-25 Michael Boutros, Jonathan Witmer Monetary policy implementation could, in theory, be constrained by deeply negative rates since overnight market participants may have an incentive to invest in cash rather than lend to other participants. Content Type(s): Staff research, Staff working papers Topic(s): Interest rates, Monetary policy framework, Monetary policy implementation JEL Code(s): E, E4, E40, E42, E43, G, G0
May 25, 2017 Project Jasper: Are Distributed Wholesale Payment Systems Feasible Yet? Financial System Review - June 2017 James Chapman, Rodney J. Garratt, Scott Hendry, Andrew McCormack, Wade McMahon This report describes a joint endeavour between public and private sectors to explore a wholesale payment system based on distributed ledger technology (DLT). They find that a stand-alone DLT system is unlikely to be as beneficial as a centralized payment system in terms of core operating costs; however, it could increase financial system efficiency as a result of integration with the broader financial market infrastructure. Content Type(s): Publications, Financial System Review articles Topic(s): Digital currencies and fintech, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E58, G, G2, G28
The Costs of Point-of-Sale Payments in Canada Staff Discussion Paper 2017-4 Anneke Kosse, Heng Chen, Marie-Hélène Felt, Valéry Dongmo Jiongo, Kerry Nield, Angelika Welte Using data from our 2014 cost-of-payments survey, we calculate resource costs for cash, debit cards and credit cards. For each payment method, we examine the total cost incurred by consumers, retailers, financial institutions and infrastructures, the Royal Canadian Mint and the Bank of Canada. Content Type(s): Staff research, Staff discussion papers Topic(s): Bank notes, Digital currencies and fintech, Financial institutions, Payment clearing and settlement systems JEL Code(s): D, D1, D12, D2, D23, D24, E, E4, E41, E42, G, G2, G21, L, L2
Canadian Bank Notes and Dominion Notes: Lessons for Digital Currencies Staff Working Paper 2017-5 Ben Fung, Scott Hendry, Warren E. Weber This paper studies the period in Canada when both private bank notes and government-issued notes (Dominion notes) were simultaneously in circulation. Because both of these notes shared many of the characteristics of today's digital currencies, the experience with these notes can be used to draw lessons about how digital currencies might perform. Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Digital currencies and fintech, Financial services JEL Code(s): E, E4, E41, E42, E5, E58
Central Bank Digital Currencies: A Framework for Assessing Why and How Staff Discussion Paper 2016-22 Ben Fung, Hanna Halaburda Digital currencies have attracted strong interest in recent years and have the potential to become widely adopted for use in making payments. Public authorities and central banks around the world are closely monitoring developments in digital currencies and studying their implications for the economy, the financial system and central banks. Content Type(s): Staff research, Staff discussion papers Topic(s): Digital currencies and fintech, Financial services, Payment clearing and settlement systems JEL Code(s): E, E4, E41, E42
November 17, 2016 Market Operations and Liquidity Provision at the Bank of Canada Bank of Canada Review - Autumn 2016 Mark de Guzman The Bank of Canada’s framework for market operations and liquidity provision describes how and when central bank liquidity might be offered with regards to the implementation of monetary policy and for supporting the stability of the Canadian financial system. Market participants can therefore plan their transactions knowing that the Bank stands ready to help manage system liquidity to support its objectives for monetary policy and financial stability. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, Financial stability, Monetary policy framework, Monetary policy implementation, Monetary policy transmission, Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E52, E58, G, G0, G01
November 17, 2016 Reinventing the Role of Central Banks in Financial Stability Bank of Canada Review - Autumn 2016 Domenico Lombardi, Lawrence L. Schembri Central banks contribute importantly to the promotion of financial stability given their sys-tem-wide macro-financial perspective and existing roles as lender of last resort and overseer of systemic payment systems. Since the global financial crisis, the financial system role of central banks has expanded to place more emphasis on the prevention of financial stress and crises. Central banks work with other responsible authorities to enhance financial system resilience and to assess and mitigate financial vulnerabilities and systemic risk. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial stability, Financial system regulation and policies, Lender of last resort, Monetary policy framework JEL Code(s): E, E4, E42, E5, E58, E6, E61, G, G2, G28
On the Value of Virtual Currencies Staff Working Paper 2016-42 Wilko Bolt, Maarten van Oordt This paper develops an economic framework to analyze the exchange rate of virtual currency. Three components are important: first, the current use of virtual currency to make payments; second, the decision of forward-looking investors to buy virtual currency (thereby effectively regulating its supply); and third, the elements that jointly drive future consumer adoption and merchant acceptance of virtual currency. Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Digital currencies and fintech, Exchange rates JEL Code(s): E, E4, E42, E5, E51, F, F3, F31, G, G1