Posts

• Measuring Interest Rate Expectations in Canada

  Staff Working Paper 2003-26 Grahame Johnson

  Financial market expectations regarding future policy actions by the Bank of Canada are an important input into the Bank's decision-making process, and they can be measured using a variety of sources. The author develops a simple expectations-based model to focus on measuring interest rate expectations that are implied by the current level of money market yields.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, Interest rates JEL Code(s): G, G1

• Income Trusts - Understanding the Issues

  Staff Working Paper 2003-25 Michael R. King

  An income trust is an investment vehicle that distributes cash generated by a set of operating assets in a tax-efficient manner. The market capitalization of income trusts has grown rapidly over the past two years, reaching $45 billion at year-end 2002.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial markets JEL Code(s): G, G1, G12, G3

• Essays on Financial Stability

  Technical Report No. 95 John Chant, Alexandra Lai, Mark Illing, Fred Daniel

  The four essays published here provide a useful overview for anyone interested in understanding the issues and policy environment surrounding financial system stability.

  Content Type(s): Staff research, Technical reports Topic(s): Financial institutions, Financial markets JEL Code(s): G, G2, G28
• August 23, 2003

  Financial Developments in Canada: Past Trends and Future Challenges

  Bank of Canada Review - Summer 2003 Charles Freedman, Walter Engert

  Freedman and Engert focus on the changing pattern of lending and borrowing in Canada in the past thirty to forty years, including the types of financial instruments used and the relative roles of financial institutions and financial markets. They examine how borrowing mechanisms have changed over time and consider the challenges facing the Canadian financial sector, including whether our financial markets are in danger of disappearing because of the size and pre-eminence of U.S. financial markets. Some of the trends examined here include syndicated lending, securitization, and credit derivatives, a form of financial engineering that has become increasingly important in the last few years. They also study bond and equity markets to determine whether Canadian capital markets have been hollowed out or abandoned by Canadian firms and conclude that the data do not provide much support for that view.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial institutions, Financial markets, Financial services, Recent economic and financial developments
• August 23, 2003

  Bank of Canada Review - Summer 2003

  

  Cover page

  Canadian World War I War Bond

  The $100 10-year bond of the FirstWar Loan is slightly larger than a sheet of legal-sized paper. It forms part of the National Currency Collection, Bank of Canada.

  Photographed by Gord Carter, Ottawa.

  Content Type(s): Publications, Bank of Canada Review
• August 22, 2003

  Measuring Interest Rate Expectations in Canada

  Bank of Canada Review - Summer 2003 Grahame Johnson

  Financial market expectations regarding future changes in the target for the overnight rate of interest are an important source of information for the Bank of Canada. Financial markets are the mechanism through which the policy rate affects other financial variables, such as longer-term interest rates, the exchange rate, and other asset prices. An accurate measure of their expectations can therefore help policy-makers assess the potential impact of contemplated changes. Johnson focuses on the expectations hypothesis, which measures expectations of future levels of the target overnight rate as implied by current money market yields. Although expectations can be derived from the current yield on any short-term fixed-income asset, some assets have proven to be more accurate predictors than others. The implementation of a policy of fixed-announcements dates has coincided with the increased predictive power of these short-term assets. As a result of this improvement, a relatively simple model of the yield curve can now provide an accurate measure of financial market expectations.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rates, Financial markets, Interest rates
• August 22, 2003

  Bank of Canada Operations during Current Power Difficulties

  During the current power difficulties, the Bank of Canada in Ottawa has been operating from its back-up facility to provide essential services, such as monitoring financial markets and the critical clearing and settlement systems.

  Content Type(s): Press, Market notices
• August 21, 2003

  Summer 2003 Consultations Views Sought on Issues Relating to the Design and Operation of The Real Return Bond Program

  A consultation document on issues relating to the design and operation of the Real Return Bond program, prepared jointly by the Department of Finance and the Bank of Canada, is being published today.

  Content Type(s): Press, Market notices
• August 21, 2003

  Real Return Bond Funding Review

  The Real Return Bond (RRB) program was created in line with the Government's fundamental objective of raising stable, low-cost funding.
• August 21, 2003

  Summer 2003 Consultation Document

  The purpose of these consultations is to obtain the views of market participants on issues relating to the design and operation of the government Real Return Bond (RRB) program.