Bank of Canada Review Article

• May 19, 2011

  Unconventional Monetary Policy: The International Experience with Central Bank Asset Purchases

  Bank of Canada Review - Spring 2011 Sharon Kozicki, Lena Suchanek, Eric Santor

  As part of their policy response to the financial crisis of 2007–09, central banks introduced numerous unprecedented monetary policy measures to provide monetary easing. This article defines and documents these measures, focusing on central bank asset purchases and their impact on central bank balance sheets. It then discusses the challenges of identifying the effects of these measures and explores possible exit strategies. The potential costs of these policies are also analyzed, as well as the broader implications for monetary policy frameworks.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Financial markets, International topics, Monetary policy framework
• May 19, 2011

  Lessons from the Use of Extraordinary Central Bank Liquidity Facilities

  Bank of Canada Review - Spring 2011 Stéphane Lavoie, Alex Sebastian, Virginie Traclet

  The recent crisis was characterized by widespread deterioration in funding conditions, as well as impairment of the mechanism through which liquidity is normally redistributed within the financial system. Central banks responded with extraordinary measures. This article examines the provision of liquidity by central banks during the crisis as they adapted their existing facilities and introduced new ones, while encouraging a return to private markets and mitigating moral hazard. A review of this experience illustrates the importance of clear principles for intervention, a flexible operating framework, and clear communication and co-operation by central banks. By exposing the degree of interdependence of financial institutions and markets, the crisis highlighted the need for reforms aimed at improving the infrastructure supporting core funding markets and the liquidity of individual institutions.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, Financial stability, Lender of last resort
• May 19, 2011

  Central Bank Collateral Policy: Insights from Recent Experience

  Bank of Canada Review - Spring 2011 Lorie Zorn, Alejandro García

  The collateral policy of central banks played a critical role during the recent financial crisis, as they worked to bolster liquidity and alleviate the funding pressures facing financial institutions. This article examines central bank collateral policy and discusses three areas in which central banks can use their collateral policy to influence financial market practices: promoting greater transparency for securitized products, improving practices related to credit risk, and reducing procyclicality in the management of market risk.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, Financial stability, Payment clearing and settlement systems
• May 19, 2011

  Supplementary article: Paying with Polymer: Developing Canada’s New Bank Notes

  Bank of Canada Review - Spring 2011 Charles Spencer

  In this article, author Charles Spencer reviews the complex process of developing the new series, which represents a dramatic change for Canada. The leading-edge security features made possible by the new substrate, the cost savings of the move to a polymer base and the environmental advantages of the new notes are also examined.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Bank notes, Credibility, Payment clearing and settlement systems
• February 17, 2011

  Competition in the Canadian Mortgage Market

  Bank of Canada Review - Winter 2010-2011 Jason Allen

  This article begins with a brief examination of the Canadian mortgage market, focusing on the market’s evolution following changes to the Bank Act in 1992, which allowed chartered banks to enter the trust business, and the subsequent entrance of virtual banks and mortgage brokers.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Interest rates, Market structure and pricing, Monetary policy transmission
• February 17, 2011

  Adverse Selection and Financial Crises

  Bank of Canada Review - Winter 2010-2011 Koralai Kirabaeva

  The recent financial crisis has highlighted the importance of adverse selection as a contributing factor to financial market instability.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial stability, Financial system regulation and policies, Market structure and pricing
• February 17, 2011

  Payment Networks: A Review of Recent Research

  Bank of Canada Review - Winter 2010-2011 James Chapman, Lana Embree, Tom Roberts, Nellie Zhang

  In this article, the authors review work done at the Bank of Canada and at other central banks with the relatively new application of network analysis to the study of payments systems.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Payment clearing and settlement systems
• February 17, 2011

  Conference Summary: Financial Globalization and Financial Instability

  Bank of Canada Review - Winter 2010-2011 Scott Hendry

  The Bank of Canada’s annual conference, held in October 2010, brought together leading researchers from universities and central banks around the world.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Financial markets, Financial stability, Financial system regulation and policies