Payment clearing and settlement systems

• December 25, 2004

  The Bank of Canada as Lender of Last Resort

  Bank of Canada Review - Winter 2004-2005 Fred Daniel, Walter Engert, Dinah Maclean

  As the ultimate provider of Canadian-dollar liquidity to the financial system, the Bank of Canada has the unique capacity to create Canadian-dollar claims on the central bank and the power to make secured loans or advances to chartered banks and other members of the Canadian Payments Association. The Bank supplies overnight credit on a routine basis through the Standing Liquidity Facility (SLF) to direct participants in the Large Value Transfer System, and Emergency Lending Assistance (ELA) to solvent deposit-taking institutions that require more substantial and prolonged credit. The authors review the policy framework that guides the Bank's lender-of-last-resort function, including the key issues, terms and conditions, and eligibility criteria associated with its SLF and ELA activities. Also discussed are foreign currency ELA, the relationship between SLF and ELA, systemic risk and Bank of Canada intervention, and the potential provision of liquidity to major clearing and settlement systems.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial stability, Lender of last resort, Payment clearing and settlement systems
• December 23, 2004

  Bank of Canada Lender-of-Last-Resort Policies

  Financial System Review - December 2004

  The Bank of Canada has distinct roles as a lender of last resort. This article outlines how and under what circumstances the Bank can routinely provide liquidity to facilitate payment settlement, as well as the various ways it can respond in more exceptional situations.

  Content Type(s): Publications, Financial System Review articles Topic(s): Financial stability, Lender of last resort, Payment clearing and settlement systems