Monetary Policy Implementation in a Negative Rate Environment Staff working paper 2017-25 Michael Boutros, Jonathan Witmer Monetary policy implementation could, in theory, be constrained by deeply negative rates since overnight market participants may have an incentive to invest in cash rather than lend to other participants. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E40, E42, E43, G, G0 Research Theme(s): Monetary policy, Monetary policy tools and implementation
Relationships in the Interbank Market Staff working paper 2016-33 Jonathan Chiu, Cyril Monnet In the interbank market, banks will sometimes trade below the central bank's deposit rate. We explain this anomaly using a theory based on market frictions and relationship lending. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E5 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial institutions and intermediation, Models and tools, Economic models, Monetary policy, Monetary policy tools and implementation
Inflation Targeting and Liquidity Traps Under Endogenous Credibility Staff working paper 2019-9 Cars Hommes, Joep Lustenhouwer Policy implications are derived for an inflation-targeting central bank, whose credibility is endogenous and depends on its past ability to achieve its targets. This is done in a New Keynesian framework with heterogeneous and boundedly rational expectations. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C6, C62, E, E3, E32, E5, E52 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
Democratic Political Economy of Financial Regulation Staff working paper 2021-59 Igor Livshits, Youngmin Park We offer a theory of how inefficiently lax financial regulation could arise in a democratic society. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E43, E44, G, G0, G01, G2, G21, G28, P, P4, P48 Research Theme(s): Financial system, Financial stability and systemic risk, Financial system regulation and oversight, Household and business credit
June 13, 2013 Monitoring and Assessing Risks in Canada’s Shadow Banking Sector Financial System Review - June 2013 Toni Gravelle, Timothy Grieder, Stéphane Lavoie Content Type(s): Publications, Financial System Review articles
Optimal Capital Regulation Staff working paper 2017-6 Stéphane Moyen, Josef Schroth We study constrained-efficient bank capital regulation in a model with market-imposed equity requirements. Banks hold equity buffers to insure against sudden loss of access to funding. However, in the model, banks choose to only partially self-insure because equity is privately costly. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E1, E13, E3, E32, E4, E44 Research Theme(s): Financial system, Financial institutions and intermediation, Financial stability and systemic risk, Financial system regulation and oversight
A Barometer of Canadian Financial System Vulnerabilities Staff analytical note 2017-24 Thibaut Duprey, Tom Roberts This note presents a composite indicator of Canadian financial system vulnerabilities—the Vulnerabilities Barometer. It aims to complement the Bank of Canada’s vulnerabilities assessment by adding a quantitative and synthesized perspective to the more granular (distributional) analysis presented in the Financial System Review. Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C1, C14, C4, C40, D, D1, D14, E, E3, E32, E6, E66, F, F0, F01, G, G0, G01, G1, G15, G2, G21, H, H6, H63 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial stability and systemic risk, Household and business credit, Models and tools, Econometric, statistical and computational methods
Can the Canadian International Investment Position Stabilize a Slowing Economy? Staff analytical note 2017-14 Maxime Leboeuf, Chen Fan In this note, we find that valuation effects can act as an important stabilizer, strengthening Canada’s net external wealth when its economic outlook worsens relative to that of other countries. Content Type(s): Staff research, Staff analytical notes JEL Code(s): F, F2, F21, F3, F32 Research Theme(s): Financial system, Financial stability and systemic risk, Structural challenges, International trade, finance and competitiveness
A Financial Stability Analysis of Zombie Firms in Canada Staff analytical note 2020-3 Timothy Grieder, Juan Ortega We measure the prevalence of zombie firms in Canada and assess how they could potentially affect the financial system. Content Type(s): Staff research, Staff analytical notes JEL Code(s): G, G3, G32 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit
Borrowing Costs for Government of Canada Treasury Bills Staff analytical note 2019-28 Jabir Sandhu, Adrian Walton, Jessica Lee The cost of borrowing Government of Canada treasury bills (t-bills) in the repurchase (repo) market is mainly explained by the relationship between the parties involved. Some pairs of parties conduct most of their repos for t-bills rather than bonds, and at relatively high borrowing costs. We speculate that these pairs have formed a mutually beneficial service relationship in which one party consistently receives t-bills, while the other receives cash at a relatively cheap rate. Content Type(s): Staff research, Staff analytical notes JEL Code(s): G, G1, G10, G11, G12, G2, G20, G21, G23, G3, G32 Research Theme(s): Financial markets and funds management, Funds management, Market functioning