Financial system regulation and policies
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Credit Card Minimum Payment Restrictions
We study a government policy that restricts repayment choices with the aim of reducing credit card debt and estimate its effects by applying a difference-in-differences methodology to comprehensive credit-reporting data about Canadian consumers. We find the policy has trade-offs: reducing revolving debt comes at a cost of reducing credit access, and potentially increasing delinquency. -
The Ecology of Automated Market Makers
This paper describes the ecology of automated market makers, which are the most popular decentralized exchange model for the pricing and trading of crypto assets within decentralized finance. -
Assessing the Impact of the Bank of Canada’s Government Bond Purchases
In March 2020, the Bank of Canada implemented the Government of Canada Bond Purchase Program, eventually purchasing approximately $340 billion of government bonds. In this paper, we analyze the impact of this program on financial market prices and yields as well as on GDP and inflation. -
Financial Intermediation and Fire Sales with Liquidity Risk Pricing
We provide a theory of fire sales in which potential buyers are subject to liquidity shocks and frictions that limit their ability to resell assets. Viewed through the lens of the model, the liquidity requirements proposed by the U. S. Securities and Exchange Commission for these intermediaries could hurt the economy. -
Finding a Needle in a Haystack: A Machine Learning Framework for Anomaly Detection in Payment Systems
Our layered machine learning framework can enhance real-time transaction monitoring in high-value payment systems, which are a central piece of a country’s financial infrastructure. When tested on data from Canadian payment systems, it demonstrated potential for accurately identifying anomalous transactions. This framework could help improve cyber and operational resilience of payment systems. -
May 9, 2024
Release of the Financial Stability Report
Press conference following the release of the Financial Stability Report. -
March 21, 2024
Getting to a new normal
Deputy Governor Toni Gravelle speaks about how the Bank of Canada will manage its balance sheet once quantitative tightening ends. -
March 21, 2024
Going back to normal: The Bank of Canada’s balance sheet after quantitative tightening
Deputy Governor Toni Gravelle provides an update on quantitative tightening and talks about how the Bank of Canada will manage its balance sheet once normalization ends. -
Procyclicality in Central Counterparty Margin Models: A Conceptual Tool Kit and the Key Parameters
Regulators need to provide effective procyclicality guidance, and central counterparties must design and calibrate their margin systems and procyclicality frameworks appropriately. To serve these needs, we provide a novel conceptual tool kit. Further, we highlight that the focus should be on the key margin system parameters in determining procyclicality.