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2133 Results

Bank Runs, Portfolio Choice, and Liquidity Provision

Staff working paper 2019-37 Toni Ahnert, Mahmoud Elamin
After the financial crisis of 2007–09, many jurisdictions introduced new banking regulations to make banks more resilient and less likely to fail. These regulations included tighter limits for the quality and quantity of bank capital and introduced minimum standards for liquidity. But what was the impact of these changes?

Narrative-Driven Fluctuations in Sentiment: Evidence Linking Traditional and Social Media

Staff working paper 2023-23 Alistair Macaulay, Wenting Song
News media present competing interpretations of what breaking news implies for the macroeconomy. Recent examples include news reporting on high inflation and yield curve inversions. Do these narratives shape macroeconomic sentiment? In this paper, we highlight the importance of narratives using evidence linking traditional media and social media.

Do hedge funds support liquidity in the Government of Canada bond market?

Staff analytical note 2023-11 Jabir Sandhu, Rishi Vala
While Government of Canada bond transactions of hedge funds are typically in the opposite direction to those of other market participants, during the peak period of market turmoil in March 2020, hedge funds sold these bonds, just as other market participants did. This shows that hedge funds can at times contribute to one-sided markets and amplify declines in market liquidity.

The reliance of Canadians on credit card debt as a predictor of financial stress

Staff analytical note 2024-18 Jia Qi Xiao
I analyze the relationship between carrying a credit card balance and future financial stress. I find that carrying a balance significantly increases the likelihood that credit card holders miss future debt payments. This likelihood tends to rise as credit card balances grow and are held for long periods.

The impact of trading flows on Government of Canada bond prices

Staff analytical note 2025-20 Andreas Uthemann, Rishi Vala, Jun Yang
Trading flows affect Government of Canada bond prices. Our estimates suggest a sale of 1% of the available supply of bonds typically lowers bond prices by 0.2%. From 2000 to 2025, demand from institutional investors, such as Canadian pension funds and foreign investors, explains 69% of quarterly price variation, with the remainder explained by changes in the supply of bonds.

Managing Risk Taking with Interest Rate Policy and Macroprudential Regulations

Staff working paper 2016-47 Simona Cociuba, Malik Shukayev, Alexander Ueberfeldt
We develop a model in which a financial intermediary’s investment in risky assets—risk taking—is excessive due to limited liability and deposit insurance and characterize the policy tools that implement efficient risk taking.
October 17, 2000

Can a Bank Change? The Evolution of Monetary Policy at the Bank of Canada 1935–2000

Lecture Gordon Thiessen Faculty of Social Science, University of Western Ontario
Over this period, there has been a fundamental transformation in the way monetary policy is conducted in Canada and in most other industrial countries. While globalization and technological change have played an important role in this area, as in so many others, they have not, to my mind, been the principal driving force behind this transformation. Far more important has been the interaction of experience and economic theory.

Assessing Global Potential Output Growth: April 2018

This note presents our estimates of potential output growth for the global economy through 2020. Overall, we expect global potential output growth to remain broadly stable over the projection horizon, averaging 3.3 per cent, although there is considerable uncertainty surrounding these estimates.
May 17, 2012

Inflation Targeting: The Recent International Experience

In the years since the 2006 renewal of Canada’s inflation-control agreement, monetary policy regimes have faced significant shocks, including the global economic and financial crisis. This article reviews the recent experience with inflation targeting, including the debate about the appropriate role of monetary policy in maintaining financial stability. In the aftermath of the crisis, both […]
Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): E, E3, E31, E5, E52, E58

Regulatory Requirements of Banks and Arbitrage in the Post-Crisis Federal Funds Market

Staff working paper 2022-48 Rodney J. Garratt, Sofia Priazhkina
This paper explains the nature of interest rates in the U.S. federal funds market after the 2007-09 financial crisis. We build a model of the over-the-counter lending market that incorporates new aspects of the financial system: abundance of liquidity, different regulatory standards for banks, and arbitrage opportunities created by limited access to the facility granting interest on excess reserves.
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