Staff discussion papers

Staff discussion papers are completed staff research studies on a wide variety of subjects relevant to central bank policy.

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Repo Market Functioning when the Interest Rate Is Low or Negative

Staff Discussion Paper 2017-3 Jean-Sébastien Fontaine, James Hately, Adrian Walton
This paper investigates how a low or negative overnight interest rate might affect the Canadian repo markets. The main conclusion is that the repo market for general collateral will continue to function effectively.

Global Real Activity for Canadian Exports: GRACE

Staff Discussion Paper 2017-2 André Binette, Tony Chernis, Daniel de Munnik
Canadian exports have often disappointed since the Great Recession. The apparent disconnect between exports and the Bank of Canada’s current measure of foreign demand has created an impetus to search for an alternative.

Central Bank Digital Currencies: A Framework for Assessing Why and How

Staff Discussion Paper 2016-22 Ben Fung, Hanna Halaburda
Digital currencies have attracted strong interest in recent years and have the potential to become widely adopted for use in making payments. Public authorities and central banks around the world are closely monitoring developments in digital currencies and studying their implications for the economy, the financial system and central banks.

The Digital Economy—Insight from a Special Survey with IT Service Exporters

Staff Discussion Paper 2016-21 Wei Dong, James Fudurich, Lena Suchanek
Information technology (IT) is an increasingly integral part of everyday business and personal life reflecting the ongoing and accelerating digital transformation of the economy. In this paper, we present information gathered from a survey with export-oriented firms in the Canadian IT service industry and consultations with industry associations aimed at shedding light on this small but highly dynamic sector.
Content Type(s): Staff research, Staff discussion papers Topic(s): Firm dynamics, Service sector JEL Code(s): D, D2, D22, L, L8, L86, O, O3, O33

The Paul Storer Memorial Lecture—Cross-Border Trade Integration and Monetary Policy

Staff Discussion Paper 2016-20 Stephen S. Poloz
In this paper we explore the nexus between cross-border trade integration and monetary policy. We first review the evidence that trade liberalization has increased the degree of integration in North America and conclude that, while robust structural inferences remain elusive, there is sufficient supporting evidence for central banks to treat the issue seriously.

Implementing Cross-Border Interbank Lending in BoC-GEM-FIN

Staff Discussion Paper 2016-19 Malik Shukayev, Argyn Toktamyssov
BIS interbank lending data show that the Great Recession generated large and persistent changes in the international interbank lending positions of various countries. The main objective of this study is to understand the role of changes in international interbank credit flows in transmitting shocks across borders.

Using Speed and Credit Limits to Address the Procyclicality of Initial Margin at Central Counterparties

Staff Discussion Paper 2016-18 Nikil Chande, Nicholas Labelle
This paper proposes a practical approach to address the procyclicality of initial margin at central counterparties (CCPs) that can work even in periods of extreme stress. The approach allows CCPs to limit the speed of margin increases resulting from spikes in market volatility.

Leaning Within a Flexible Inflation-Targeting Framework: Review of Costs and Benefits

Staff Discussion Paper 2016-17 Denis Gorea, Oleksiy Kryvtsov, Tamon Takamura
This note examines the merits of monetary policy adjustments in response to financial stability concerns, taking into account changes in the state of knowledge since the renewal of the inflation-targeting agreement in 2011. A key financial system vulnerability in Canada is elevated household indebtedness: as more and more households are nearing their debt-capacity limits, the likelihood and severity of a large negative correction in housing markets are also increasing.

Credit Risk and Collateral Demand in a Retail Payment System

Staff Discussion Paper 2016-16 Héctor Pérez Saiz, Gabriel Xerri
The recent financial crisis has led to the development of new regulations to control risk in designated payment systems, and the implementation of new credit risk management standards is one of the key issues. In this paper, we study various credit risk management schemes for the Canadian retail payment system (ACSS) that are designed to cover the exposure of a defaulting member.
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