June 12, 2014
Posts
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June 12, 2014
Stress Testing the Canadian Banking System: A System-Wide Approach
Stress testing is an important tool used by financial authorities and entities around the world to evaluate potential risks to the financial system. Kartik Anand, Guillaume Bédard-Pagé and Virginie Traclet discuss different stress-testing approaches, with emphasis on the innovative and analytically rigorous model developed by the Bank of Canada: the MacroFinancial Risk Assessment Framework (MFRAF). They also present the stress-test results obtained in the context of the 2013 Canada Financial Sector Assessment Program led by the International Monetary Fund, including the important contributions made by the use of MFRAF in the exercise. -
June 12, 2014
Reforming Financial Benchmarks: An International Perspective
Thomas Thorn and Harri Vikstedt examine the efforts being taken internationally and in Canada to enhance the governance and integrity of financial benchmarks. The report provides an overview of how interbank interest rate benchmarks are set and describes the weaknesses in the process that were exposed by the financial crisis. It also explains recent policy developments designed to make global and Canadian interbank benchmarks more robust. -
June 12, 2014
Making Banks Safer: Implementing Basel III
Éric Chouinard and Graydon Paulin review the progress to date in implementing Basel III, the new framework of global regulatory standards for the banking sector developed by the Basel Committee on Banking Supervision. The report highlights the expected net benefits of implementing Basel III, as well as the challenges in ensuring international consistency in measuring the risk-weighted capital of banks. It includes a discussion on how implementing Basel III has affected the banking system in Canada and other important jurisdictions, and demonstrates the need for ongoing assessment of the effects on the financial system and the macroeconomy. -
June 12, 2014
Financial System Review - June 2014
The Reports section of the Financial System Review examines selected issues of relevance to the Canadian and global financial systems. The June 2014 issue features three reports on financial system initiatives: making financial benchmarks more robust; implementing the stronger Basel III capital and liquidity framework for banks; and using stress tests to assess financial system risks.
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June 12, 2014
Bank of Canada’s enhanced financial stability framework shows system is robust, housing vulnerabilities remain
The Bank of Canada today unveiled an enhanced framework to gauge the evolving risks to financial stability in its semi-annual Financial System Review (FSR), finding that the Canadian financial system is robust but still faces significant vulnerabilities. “After weighing the risks to financial stability through our improved framework, our level of comfort as policy makers […] -
June 9, 2014
Survey of Foreign Exchange Rates Published by the Bank of Canada
As part of broader international official sector work to review the design of foreign exchange (FX) reference rates, and the way market participants use them, the Bank of Canada is undertaking a review of the market practices relating to the indicative FX rates published on the Bank of Canada’s website. -
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Rollover Risk, Liquidity and Macroprudential Regulation
I study rollover risk in the wholesale funding market when intermediaries can hold liquidity ex ante and are subject to fire sales ex post. -
Understanding the Cash Demand Puzzle
We develop a model to explain a puzzling trend in cash demand in recent years: the value of bank notes in circulation as a percentage of GDP has remained stable despite decreasing cash usage at points of sale owing to competition from alternative means of payment such as credit cards.