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French Provincial Issues in Canada

The coins pictured on the cover are part of the National Currency Collection, Bank of Canada.
Photography by Gord Carter, Ottawa.

We draw on the Canadian experience to examine how monetary and macroprudential policies interact and possibly complement each other in achieving their respective price and financial stability objectives.

The current monetary policy framework of the Fed intends to be more ’inclusive’ by running the economy hot for longer during expansions.

This paper provides an overview of digitalization and its economic implications. We assess the scope of digitalization in Canada as well as the challenges related to its measurement.

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

We present a technical description of the Top-Down Solvency Assessment (TDSA) tool. As a solvency stress-testing tool, TDSA is used to assess the banking sector’s capital resilience to hypothetical future risk scenarios.

This issue features three articles that present research and analysis by Bank of Canada staff. The first updates previous Bank estimates of measurement bias in the Canadian consumer price index; the second uses a new term-structure model to analyze the relationship between the short-term policy rate and long-term interest rates; and the third examines indicators of balance-sheet risks at financial institutions in Canada.

I study the links between Canadian banks and non-bank financial intermediaries (NBFIs) by observing co-movements in stock prices. Perceived interconnections increased before the COVID-19 pandemic but have since stabilized, with the strongest ties seen between large banks and NBFIs. The secured credit line extended to Home Trust, a non-bank mortgage lender that experienced severe funding stress in 2017, significantly reduced banks' risk exposure to NBFIs during this episode.

We document the outcome of an options decimalization pilot on Canada’s derivatives exchange. Decimalization improves measures of liquidity and price efficiency. The impact differs by the moneyness of an option and is greatest for out-of-the-money options.

The Reports section of the Financial System Review examines selected issues of relevance to the Canadian and global financial systems. The June 2014 issue features three reports on financial system initiatives: making financial benchmarks more robust; implementing the stronger Basel III capital and liquidity framework for banks; and using stress tests to assess financial system risks.