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
Multi-Product Pricing: Theory and Evidence from Large Retailers in Israel Staff working paper 2020-12 Marco Bonomo, Carlos Carvalho, Oleksiy Kryvtsov, Sigal Ribon, Rodolfo Rigato Standard theories of price adjustment are based on the problem of a single-product firm, and therefore they may not be well suited to analyze price dynamics in the economy with multiproduct firms. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D2, D21, D22, E, E3, E31, E5, E52, L, L1, L11 Research Theme(s): Financial markets and funds management, Market functioning, Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures
The Financial Origins of Non-fundamental Risk Staff working paper 2022-4 Sushant Acharya, Keshav Dogra, Sanjay Singh We explore the idea that the financial sector can be a source of non-fundamental risk to the rest of the economy. We also consider whether policy can be used to reduce this risk—either by increasing the supply of publicly backed safe assets or by reducing the demand for safe assets. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D5, D52, D8, D84, E, E6, E62, G, G1, G10, G12 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial stability and systemic risk, Household and business credit, Monetary policy, Monetary policy tools and implementation
The Central Bank’s Dilemma: Look Through Supply Shocks or Control Inflation Expectations? Staff working paper 2022-41 Paul Beaudry, Thomas J. Carter, Amartya Lahiri When countries are hit by supply shocks, central banks often face the dilemma of either looking through such shocks or reacting to them to ensure that inflation expectations remain anchored. In this paper, we propose a tractable framework to capture this dilemma and then explore optimal policy under a range of assumptions about how expectations are formed. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E1, E12, E2, E24, E3, E31, E5, E52, E58, E6, E65 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
The Mutable Geography of Firms’ International Trade Staff working paper 2025-11 Lu Han Exporters frequently change their market destinations. This paper introduces a new approach to identifying the drivers of these decisions over time. Analysis of customs data from China and the UK shows most changes are driven by demand rather than supply-related shocks. Content Type(s): Staff research, Staff working papers JEL Code(s): F, F1, F12, F14, L, L1, L11 Research Theme(s): Models and tools, Economic models, Structural challenges, International trade, finance and competitiveness
The Usage of Security Lending Facilities under Unconventional Monetary Policy: Evidence from Sweden Staff working paper 2026-9 Marianna Blix Grimaldi, Fabienne Schneider, David Vestin This paper examines the interaction between quantitative easing (QE) and the securities lending facility (SLF) using a detailed dataset on Riksbank QE purchases, Swedish DMO SLF transactions and OTC repo deals. A theoretical model further shows how excess demand for assets and search frictions shift the SLF from a backstop to a first-resort tool. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E5, E52, E58, G, G2, G21 Research Theme(s): Financial markets and funds management, Market functioning, Market structure, Financial system, Financial institutions and intermediation, Monetary policy, Monetary policy tools and implementation
Is a Cashless Society Problematic? Staff discussion paper 2018-12 Walter Engert, Ben Fung, Scott Hendry The use of bank notes in Canada for payments has declined consistently for some time, and similar trends are evident in other countries. This has led some observers to predict a cashless society in the future. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E4, E41, E42, E5 Research Theme(s): Financial system, Financial stability and systemic risk, Money and payments, Cash and bank notes, Digital assets and fintech, Retail payments
Estimating Policy Functions in Payments Systems Using Reinforcement Learning Staff working paper 2021-7 Pablo S. Castro, Ajit Desai, Han Du, Rodney J. Garratt, Francisco Rivadeneyra We demonstrate the ability of reinforcement learning techniques to estimate the best-response functions of banks participating in high-value payments systems—a real-world strategic game of incomplete information. Content Type(s): Staff research, Staff working papers JEL Code(s): A, A1, A12, C, C7, D, D8, D83, E, E4, E42, E5, E58 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Digital assets and fintech, Payment and financial market infrastructures
Survival Analysis of Bank Note Circulation: Fitness, Network Structure and Machine Learning Staff working paper 2020-33 Diego Rojas, Juan Estrada, Kim Huynh, David T. Jacho-Chávez Using the Bank of Canada's Currency Information Management Strategy, we analyze the network structure traced by a bank note’s travel in circulation and find that the denomination of the bank note is important in our potential understanding of the demand and use of cash. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C52, C6, C65, C8, C81, E, E4, E42, E5, E51 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Cash and bank notes
Modelling Canadian mortgage debt and payments in a semi-structural model Staff analytical note 2024-1 Fares Bounajm, Austin McWhirter We show how Canadian mortgage debt dynamics can be modelled in a semi-structural macroeconomic model, such as the Bank of Canada’s LENS. The model we propose accounts for Canada’s unique mortgage debt structure. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E2, E27, E4, E43, E47, G, G5, G51 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission