Financial stability, Financial system regulation and policies
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Could all-to-all trading improve liquidity in the Government of Canada bond market?
We find that on any given day, nearly half of Government of Canada bond transactions by clients of dealers can be offset with other clients, including during the turmoil in March 2020. Our results show that under certain conditions clients could potentially trade directly with each other and are a step towards understanding the relevance of broader all-to-all trading in the Government of Canada bond market. -
The Ecology of Automated Market Makers
This paper describes the ecology of automated market makers, which are the most popular decentralized exchange model for the pricing and trading of crypto assets within decentralized finance. -
How big is cash-futures basis trading in Canada’s government bond market?
Cash-futures basis trading has grown alongside the Government of Canada bond futures market. We examine this growth over time in relation to Government of Canada bond and repurchase agreement markets and provide details on the type of market participants that engage in this type of trading activity. -
Central Bank Liquidity Policy in Modern Times
Across several dimensions of lender of last resort policy, I highlight broad changes that have occurred since the 2008–09 global financial crisis and discuss some of the key challenges, choices and considerations facing the designers of central bank liquidity tools today. -
June 13, 2024
Reviewing our pandemic actions
Deputy Governor Sharon Kozicki talks about the importance of central bank transparency and accountability. She looks at the exceptional monetary policy measures the Bank of Canada used during the COVID-19 pandemic and analyzes their effectiveness. -
June 13, 2024
Exceptional policies for an exceptional time: From quantitative easing to quantitative tightening
Deputy Governor Sharon Kozicki discusses the use of exceptional monetary policy tools during the COVID-19 pandemic, as well as the Bank’s commitment to transparency and accountability. -
Assessing the Impact of the Bank of Canada’s Government Bond Purchases
In March 2020, the Bank of Canada implemented the Government of Canada Bond Purchase Program, eventually purchasing approximately $340 billion of government bonds. In this paper, we analyze the impact of this program on financial market prices and yields as well as on GDP and inflation. -
Decomposing Systemic Risk: The Roles of Contagion and Common Exposures
We examine systemic risks within the Canadian banking sector, decomposing them into three contribution channels: contagion, common exposures, and idiosyncratic risk. Through a structural model, we dissect how interbank relationships and market conditions contribute to systemic risk, providing new insights for financial stability. -
Financial Intermediation and Fire Sales with Liquidity Risk Pricing
We provide a theory of fire sales in which potential buyers are subject to liquidity shocks and frictions that limit their ability to resell assets. Viewed through the lens of the model, the liquidity requirements proposed by the U. S. Securities and Exchange Commission for these intermediaries could hurt the economy.