Credit and credit aggregates, Financial institutions, Financial markets, Financial services, Financial stability, Financial system regulation and policies, International financial markets, Lender of last resort, Monetary policy implementation, Payment clearing and settlement systems
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June 9, 2022
Release of the Financial System Review
Press conference following the release of the Financial System Review. -
Settlement Balances Deconstructed
Because of the COVID-19 pandemic, public interest in the Bank’s balance sheet and, more specifically, the size of settlement balances, has grown. This paper deconstructs the concept of settlement balances and provides some context on their history, current state and possible future evolution. -
Foreign Exchange Interventions: The Long and the Short of It
This paper studies the effects of foreign exchange (FX) interventions in a two-region model where governments issue both short- and long-term bonds. We find that the term premium channel dominates the trade balance channel in our calibrated model. As a result, the conventional beggar-thy-neighbor effects of interventions are overturned. -
June 2, 2022
Economic progress report: Navigating a high inflation environment
Bank of Canada Deputy Governor Paul Beaudry talks about the Bank’s latest interest rate announcement and the importance of keeping inflation expectations well anchored to prevent high inflation from becoming entrenched. -
June 2, 2022
Navigating high inflation
On June 1, the Bank of Canada decided to increase its policy interest rate by half a percentage point. Speaking the next day, Deputy Governor Paul Beaudry explains why inflation has been higher than expected and what we are doing to get it back to our 2% target. -
How well can large banks in Canada withstand a severe economic downturn?
We examine the potential impacts of a severe economic shock on the resilience of major banks in Canada. We find these banks would suffer significant financial losses but nevertheless remain resilient. This underscores the role well-capitalized banks and sound underwriting practices play in supporting economic activity in a downturn. -
May 24, 2022
An Overview of Lynx, Canada’s High-Value Payment System
This document provides an overview of Lynx—Canada’s high-value payment system—and summarizes the system’s design. It explains the development and purpose of Lynx as well as the legal and regulatory framework governing its operation. It also describes the various settlement mechanisms and processes Lynx uses to allow system participants to meet their diverse payment needs while ensuring that risks that arise in the system are managed appropriately. -
Financial Intermediaries and the Macroeconomy: Evidence from a High-Frequency Identification
We provide empirical evidence of effects to the aggregate economy from surprises about financial intermediaries’ net worth based on a high-frequency identification strategy. We estimate that news of a 1% decline in intermediaries’ net worth leads to a 0.2%–0.4% decrease in the market value of nonfinancial firms. -
Transmission of Cyber Risk Through the Canadian Wholesale Payment System
This paper studies how the impact of a cyber attack that paralyzes one or multiple banks' ability to send payments would transmit to other banks through the Canadian wholesale payment system. Based on historical payment data, we simulate a wide range of scenarios and evaluate the total payment disruption in the system.