June 7, 2018 Establishing a Resolution Regime for Canada’s Financial Market Infrastructures Financial System Review - June 2018 Elizabeth Woodman, Lucia Chung, Nikil Chande This report highlights how an effective resolution regime promotes financial stability. It does this by ensuring that financial market infrastructures (FMIs) would be able to continue to provide their critical functions during a period of stress when an FMI’s own recovery measures were failing. The report explains the Bank of Canada’s new role as the resolution authority for FMIs, which will further bolster financial system resilience. Content Type(s): Publications, Financial System Review articles JEL Code(s): G, G1, G10, G19, G2, G20, G28, G29
Merchant Acceptance of Cash and Credit Cards at the Point of Sale Staff analytical note 2018-1 Ben Fung, Kim Huynh, Kerry Nield, Angelika Welte Recent data show that the use of credit cards in Canada has been increasing, while the use of cash has been declining. At the same time, only two-thirds of small or medium-sized businesses accept credit cards. Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C2, D, D1, E, E4, E41 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Cash and bank notes, Retail payments
CBDC: Banking and Anonymity Staff working paper 2024-9 Yuteng Cheng, Ryuichiro Izumi We examine the optimal amount of user anonymity in a central bank digital currency in the context of bank lending. Anonymity, defined as the lender’s inability to discern an entrepreneur’s actions that enable fund diversion, influences the choice of payment instrument due to its impact on a bank’s lending decisions. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E42, E5, E58, G, G2, G28 Research Theme(s): Financial system, Financial institutions and intermediation, Monetary policy, Monetary policy tools and implementation, Money and payments, Digital assets and fintech, Retail payments
The potential effect of a central bank digital currency on deposit funding in Canada Staff analytical note 2020-15 Alejandro García, Bena Lands, Xuezhi Liu, Joshua Slive A retail central bank digital currency denominated in Canadian dollars could, in theory, create competition for bank deposit funding. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E4, E41, E44, E5, G, G1, G10, G17, G2, G21, G3, G32, O Research Theme(s): Financial system, Financial institutions and intermediation, Financial stability and systemic risk, Money and payments, Digital assets and fintech
Anticipated Technology Shocks: A Re‐Evaluation Using Cointegrated Technologies Staff working paper 2017-11 Joel Wagner Two approaches have been taken in the literature to evaluate the relative importance of news shocks as a source of business cycle volatility. The first is an empirical approach that performs a structural vector autoregression to assess the relative importance of news shocks, while the second is a structural-model-based approach. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E32 Research Theme(s): Models and tools, Economic models, Monetary policy, Real economy and forecasting, Structural challenges, Digitalization and productivity
Classical Decomposition of Markowitz Portfolio Selection Staff working paper 2020-21 Christopher Demone, Olivia Di Matteo, Barbara Collignon In this study, we enhance Markowitz portfolio selection with graph theory for the analysis of two portfolios composed of either EU or US assets. Using a threshold-based decomposition of their respective covariance matrices, we perturb the level of risk in each portfolio and build the corresponding sets of graphs. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C0, C02 Research Theme(s): Financial markets and funds management, Market functioning, Models and tools, Econometric, statistical and computational methods
Adverse Selection with Heterogeneously Informed Agents Staff working paper 2018-7 Mohammad Davoodalhosseini A model of over-the-counter markets is proposed. Some asset buyers are informed in that they can identify high quality assets. Heterogeneous sellers with private information choose what type of buyers they want to trade with. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D4, D40, D8, D82, D83, G, G0, G01, G1, G10, G2, G20 Research Theme(s): Financial markets and funds management, Market structure, Financial system, Financial stability and systemic risk, Models and tools, Economic models
Demographic Origins of the Decline in Labor’s Share Staff working paper 2023-20 Andrew Glover, Jacob Short Declining labour market dynamism of workers results in an increasing wedge between their earnings and their marginal product as they age. This wedge and the demographic shift in the earnings shares of older workers can account for 59% of the decline in labor’s share of earnings in the United States. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D3, D33, E, E2, E25, J, J1, J3, J6, J62 Research Theme(s): Monetary policy, Real economy and forecasting, Structural challenges, Demographics and labour supply
Anonymous Credentials: Secret-Free and Quantum-Safe Staff working paper 2023-50 Raza Ali Kazmi, Cyrus Minwalla An anonymous credential mechanism is a set of protocols that allows users to obtain credentials from an organization and demonstrate ownership of these credentials without compromising users’ privacy. In this work, we construct the first secret-free and quantum-safe credential mechanism. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E42, G, G2, G21, O, O3, O31 Research Theme(s): Money and payments, Digital assets and fintech, Payment and financial market infrastructures
Monetary Policy Tradeoffs Between Financial Stability and Price Stability Staff working paper 2016-49 Malik Shukayev, Alexander Ueberfeldt We analyze the impact of interest rate policy on financial stability in an environment where banks can experience runs on their short-term liabilities, forcing them to sell assets at fire-sale prices. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D6, D62, E, E3, E32, E4, E44, G, G0, G01 Research Theme(s): Financial system, Financial stability and systemic risk, Monetary policy, Monetary policy framework and transmission