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2138 Results

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.
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.

Unintended Consequences of the Home Affordable Refinance Program

Staff working paper 2024-11 Phoebe Tian, Chen Zheng
We investigate the unintended consequences of the Home Affordable Refinance Program (HARP). Originally designed to help borrowers refinance after the 2008–09 global financial crisis, HARP inadvertently strengthened the market power of incumbent lenders by creating a cost advantage for them. Despite a 2013 policy rectifying this cost advantage, we still find significant welfare losses for borrowers.

The Consumer Value Proposition for a Hypothetical Digital Canadian Dollar

Staff discussion paper 2024-16 Martine Warren, Bill Laur, Ted Garanzotis, Sebastian Hernandez
We explore the consumer value proposition of a hypothetical Digital Canadian Dollar, adoption considerations and the users who would benefit most from this potential new payment method. We employ a design-thinking consultation methodology, allowing participants to interact with research prototypes of increasing complexity to reveal user preferences, constraints and adoption influences.

Endogenous Liquidity and Capital Reallocation

Staff working paper 2022-27 Wei Cui, Randall Wright, Yu Zhu
We study economies where firms acquire capital in primary markets then retrade it in secondary markets after information on idiosyncratic productivity arrives. Our secondary markets incorporate bilateral trade with search, bargaining and liquidity frictions.

On Causal Networks of Financial Firms: Structural Identification via Non-parametric Heteroskedasticity

Staff working paper 2020-42 Ruben Hipp
Banks’ business interactions create a network of relationships that are hidden in the correlations of bank stock returns. But for policy interventions, we need causality to understand how the network changes. Thus, this paper looks for the causal network anticipated by investors.
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

Seeking Safety

Staff working paper 2018-41 Toni Ahnert, Enrico Perotti
The scale of safe assets suggests a structural demand for a safe wealth share beyond transaction and liquidity roles. We study how investors achieve a reference wealth level by combining self-insurance and contingent liquidation of investment. Intermediaries improve upon autarky, insuring investors with poor self-insurance and limiting liquidation.
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