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2092 Results

Monetary Policy, Private Debt and Financial Stability Risks

Staff working paper 2016-59 Gregory Bauer, Eleonora Granziera
Can monetary policy be used to promote financial stability? We answer this question by estimating the impact of a monetary policy shock on private-sector leverage and the likelihood of a financial crisis. Impulse responses obtained from a panel VAR model of 18 advanced countries suggest that the debt-to-GDP ratio rises in the short run following an unexpected tightening in monetary policy.

Interaction of Macroprudential and Monetary Policies: Practice Ahead of Theory

Staff discussion paper 2024-18 Thibaut Duprey, Yaz Terajima, Jing Yang
We draw on the Canadian experience to examine how monetary and macroprudential policies interact and possibly complement each other in achieving their respective price and financial stability objectives.

Prudential Liquidity Regulation in Banking—A Literature Review

Staff discussion paper 2018-8 Adi Mordel
Prudential liquidity requirements are a relatively recent regulatory tool on the international front, introduced as part of the Basel III accord in the form of a liquidity coverage ratio (LCR) and a net stable funding ratio (NSFR). I first discuss the rationale for regulating bank liquidity by highlighting the market failures that it addresses while reviewing key theoretical contributions to the literature on the motivation for prudential liquidity regulation.

Could a Higher Inflation Target Enhance Macroeconomic Stability?

Recent international experience with the effective lower bound on nominal interest rates has rekindled interest in the benefits of inflation targets above 2 per cent. We evaluate whether an increase in the inflation target to 3 or 4 per cent could improve macroeconomic stability in the Canadian economy.

Canadians’ Access to Cash Before and During the COVID-19 Pandemic

Staff discussion paper 2022-15 Heng Chen, Marie-Hélène Felt
This paper studies Canadians’ access to cash using the geographical distribution of automated banking machines (ABMs). During the pandemic, there have been no sustained adverse effects on cash accessibility.
November 16, 2021

Labour market uncertainties and monetary policy

Remarks (delivered virtually) Lawrence L. Schembri Canadian Association for Business Economics Toronto, Ontario
Deputy Governor Lawrence Schembri talks about changes to the labour market, and how the pandemic affected Canadian workers. He also discusses how the Bank is adapting labour market analysis tools to help guide monetary policy decisions that will support a more inclusive recovery.
April 13, 2007

The Large-Value Payments System: Insights from Selected Bank of Canada Research

Given the Bank of Canada's strong interest in the safe and efficient operation of major clearing and settlement systems, the Bank maintains a rigorous research agenda as a means of informing payments system policy and oversight. In this article, Arjani and Engert review recent research undertaken by Bank staff concerning the risk and efficiency of the Large Value Transfer System (LVTS). Based on the findings from this research, the authors conclude that the design of the LVTS strikes an effective balance between risk and efficiency. The article also demonstrates the increased use of simulation analysis as a tool for conducting payments system research. A brief summary of the Bank's oversight strategy for systemically important payments systems is also provided. Goals for future research are noted as well, including modelling of participant behaviour and continued external collaboration with other researchers.

Bank Market Power and Central Bank Digital Currency: Theory and Quantitative Assessment

We show that issuing a deposit-like central bank digital currency (CBDC) with a proper interest rate would encourage banks to pay higher interest to keep their customers. Banks would then attract more deposits and offer more loans. Hence, a CBDC would not necessarily crowd out private banking.
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