November 17, 2011
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November 17, 2011
This issue features four articles that present research and analysis by Bank staff. The first focuses on reforming the international monetary system; the second on the role of collateral and haircut policy in central bank lending; and the third on the extraction of information from the Business Outlook Survey using principal-component analysis. The fourth reviews studies that model the counterfeiting of bank notes.
Bank of Canada Review - Autumn 2011
Content Type(s):
Publications,
Bank of Canada Review
November 17, 2011
Liquidity Provision and Collateral Haircuts in Payments Systems
Central banks play a pivotal role in well-functioning payments systems by providing liquidity via collateralized lending. This article discusses the role of collateral and haircut policy in central bank lending, as well as the distinguishing features of the central bank’s policy relative to private sector practices. It presents a model that explicitly incorporates the unique role of central banks in the payments system and argues that central banks must consider how their haircut policies affect the relative price and liquidity of assets, the market’s asset allocation, and the likelihood of participants to default. Furthermore, under extraordinary circumstances, there is a rationale for the central bank to temporarily reduce haircuts or broaden the list of eligible collateral to mitigate the shortage of liquidity in the market.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Central bank research,
Financial stability,
Payment clearing and settlement systems
November 17, 2011
Extracting Information from the Business Outlook Survey: A Principal-Component Approach
This article reviews recent work that uses principal-component analysis to extract information common to indicators from the Bank of Canada’s Business Outlook Survey (BOS). The authors use correlation analysis and an out-of-sample forecasting exercise to assess and compare the information content of the principal component with that of responses to key individual survey questions on growth in real gross domestic product and in real business investment. Results suggest that summarizing the common movements among BOS indicators may provide useful information for forecasting near-term growth in business investment. For growth in real gross domestic product, however, the survey’s balance of opinion on future sales growth appears to be more informative.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Business fluctuations and cycles,
Regional economic developments
November 17, 2011
Modelling the Counterfeiting of Bank Notes: A Literature Review
The objective of this article is to improve our understanding of counterfeiting and its policy implications by reviewing research in this area. There has been almost no empirical work on counterfeiting because of the limited availability of counterfeiting data and related statistics. The authors therefore focus on theoretical studies that directly model the behaviour of the relevant economic agents. They first establish some stylized facts about counterfeiting to provide a general understanding of the problem. They then briefly review several models of counterfeiting and summarize their relevant insights, focusing on the implications of the findings for the incentive to counterfeit, social welfare and anti-counterfeiting policies. The authors find that the policy implications of these studies support the Bank’s comprehensive anti-counterfeiting strategy.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Bank notes
October 26, 2011
The Bank projects that the economy will expand by 2.1 per cent in 2011, 1.9 per cent in 2012 and 2.9 per cent in 2013. Total CPI inflation is expected to trough around 1 per cent by the middle of 2012.
Monetary Policy Report – October 2011
Content Type(s):
Publications,
Monetary Policy Report
October 17, 2011
The survey results point to an overall easing in business-lending conditions during the third quarter of 2011. The balance of opinion of both the price and non-price aspects of business lending eased during the quarter.
Senior Loan Officer Survey - Third-Quarter 2011
Content Type(s):
Publications,
Senior Loan Officer Survey
October 17, 2011
Responses to the autumn survey point to less optimism among firms than in the summer survey. Indicators of future business activity, capacity constraints and price pressures have all moved down from the levels recorded in the previous survey.
Business Outlook Survey - Autumn 2011
Content Type(s):
Publications,
Business Outlook Survey
August 24, 2011
Quarterly Financial Report - Second Quarter, 2011 - For the period ended 30 June 2011
Quarterly Financial Report - Second Quarter 2011
Content Type(s):
Publications,
Quarterly Financial Report
August 18, 2011
This special issue, “Real-Financial Linkages,” examines the Bank’s research using theoretical and empirical models to improve its understanding of the linkages between financial and macroeconomic developments in the wake of the recent global financial crisis.
Bank of Canada Review - Summer 2011
Content Type(s):
Publications,
Bank of Canada Review