December 21, 2016 Key inflation indicators and the target range Data and definitions: Total CPI, CPI-trim, CPI-median, CPI-common and Target Range
Monetary Policy, Private Debt and Financial Stability Risks Staff Working Paper 2016-59 Gregory Bauer, Eleonora Granziera Can monetary policy be used to promote financial stability? We answer this question by estimating the impact of a monetary policy shock on private-sector leverage and the likelihood of a financial crisis. Impulse responses obtained from a panel VAR model of 18 advanced countries suggest that the debt-to-GDP ratio rises in the short run following an unexpected tightening in monetary policy. Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Financial stability, Monetary policy, Monetary policy transmission JEL Code(s): C, C2, C21, C23, E, E5, E52, E58
December 16, 2016 Weekly Financial Statistics - 16 December 2016 Content Type(s): Publications, Historical: Weekly Financial Statistics
Equity Option-Implied Probability of Default and Equity Recovery Rate Staff Working Paper 2016-58 Bo Young Chang, Greg Orosi There is a close link between prices of equity options and the default probability of a firm. We show that in the presence of positive expected equity recovery, standard methods that assume zero equity recovery at default misestimate the option-implied default probability. Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Financial markets, Market structure and pricing JEL Code(s): G, G1, G13, G3, G33
December 15, 2016 Release of the Financial System Review Opening statement Stephen S. Poloz Ottawa, Ontario Press conference following the release of the Financial System Review. Content Type(s): Press, Speeches and appearances, Opening statements Topic(s): Credit and credit aggregates, Financial stability, Financial system regulation and policies, Housing, Regional economic developments, Sectoral balance sheet
December 15, 2016 Toward More Resilient Markets: Over-the-Counter Derivatives Reform in Canada Financial System Review - December 2016 Michael Mueller, André Usche In Toward More Resilient Markets: Over-the-Counter Derivatives Reform in Canada, Michael Mueller and André Usche show that the implementation of derivatives market reforms in Canada is well under way and has lessened vulnerabilities. But accompanying changes to market structure have both positive and negative effects that require ongoing attention from authorities. Content Type(s): Publications, Financial System Review articles Topic(s): Financial markets, Financial stability, Financial system regulation and policies JEL Code(s): G, G0, G01, G1, G15, G2, G28
December 15, 2016 The Rise of Mortgage Finance Companies in Canada: Benefits and Vulnerabilities Financial System Review - December 2016 Donald Coletti, Marc-André Gosselin, Cameron MacDonald The Rise of Mortgage Finance Companies in Canada: Benefits and Vulnerabilities, by Don Coletti, Marc-André Gosselin and Cameron MacDonald, examines the increased importance of mortgage finance companies (MFCs) in the Canadian mortgage market. The authors discuss the MFC business model, highlighting MFCs’ relationship with mortgage brokers and banks, as well as the benefits they bring to Canadian borrowers. The authors conclude with a discussion of the impact of MFCs on financial system vulnerabilities. Content Type(s): Publications, Financial System Review articles Topic(s): Financial institutions, Financial stability, Financial system regulation and policies JEL Code(s): G, G2, G23
December 15, 2016 Monitoring Shadow Banking in Canada: A Hybrid Approach Financial System Review - December 2016 Bo Young Chang, Gitanjali Kumar, André Usche, Michael Januska In Monitoring Shadow Banking in Canada: A Hybrid Approach, Bo Young Chang, Michael Januska, Gitanjali Kumar and André Usche discuss how lending that occurs outside the traditional banking system provides benefits to the economy but must be monitored carefully for potential financial sector vulnerabilities. They describe how the Bank defines and measures shadow banking and how it assesses vulnerabilities in the sector, using an approach that examines both markets and entities. Content Type(s): Publications, Financial System Review articles Topic(s): Financial institutions, Financial markets, Financial stability JEL Code(s): G, G0, G01, G2, G23