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Conditions in the international financial system have improved considerably since June in response to the forceful actions taken by policy-makers around the world.

FSR Highlights - December 2009

The Canadian financial system comprises financial markets, financial institutions, and the clearing and settlement systems.

Several measures suggest economic outcomes have improved for Indigenous Peoples in recent decades. Yet, institutional settings and gaps in infrastructure and financing continue to hinder their economic progress. Recent efforts have helped address some data gaps, and new institutions are helping Indigenous communities to overcome historic barriers to growth.

The global economic recovery is proceeding but is not yet self-sustaining. Greater emphasis on balance sheet repair by households, banks, and governments in a number of advanced economies is expected to temper the pace of global growth relative to the Bank’s outlook in April.

This article summarizes the proceedings of a conference hosted by the Bank of Canada in May 1998. This was the second Bank conference to focus directly on issues concerning financial markets. The topic for 1998—the extraction of information from the prices of financial assets—has been an area of extensive research by central banks worldwide because of its connection to monetary policy. The Bank wanted to encourage such work by Canadian researchers as well as solicit feedback on work conducted internally. It also wanted to broaden the understanding of the interplay in the markets between central banks and other participants. It therefore assembled a wide mix of researchers, central bankers, and market participants. The summary briefly outlines the papers presented as well as the wrap-up discussion.

Deputy Governor Toni Gravelle discusses the commodity price shock and its implications for the Canadian economy and monetary policy.

This paper analyzes the implications of the global financial cycle for conventional and unconventional monetary policies and macroprudential policy in small, open economies such as Canada. The paper starts by summarizing recent work on financial cycles and their growing correlation across borders.

We identify the drivers of unsecured and collateralized loan volumes, rates and haircuts in Canada using the Bayesian model averaging approach to deal with model uncertainty. Our results suggest that the key friction driving behaviour in this market is the collateral reallocation cost faced by borrowers.

The Canadian overnight repo market persistently shows signs of latent funding pressure around month-end periods. Both the overnight repo rate and Bank of Canada liquidity provision tend to rise in these windows. This paper proposes three non-mutually exclusive hypotheses to explain this phenomenon.

The global economy has shown greater strength than was anticipated at the time of the November Report.