Resilience of bank liquidity ratios in the presence of a central bank digital currency Staff Analytical Note 2022-5 Alissa Gorelova, Bena Lands, Maria teNyenhuis Could Canadian banks continue to meet their regulatory liquidity requirements after the introduction of a cash-like retail central bank digital currency (CBDC)? We conduct a hypothetical exercise to estimate how a CBDC could affect bank liquidity by increasing the run-off rates of transactional retail deposits under four increasingly severe scenarios. Content Type(s): Staff research, Staff analytical notes Topic(s): Central bank research, Digital currencies and fintech, Econometric and statistical methods, Financial institutions, Financial stability JEL Code(s): C, E, E4, G, G2, G21, O, O3, O33
More Than Words: Fed Chairs’ Communication During Congressional Testimonies Staff Working Paper 2022-20 Michelle Alexopoulos, Xinfen Han, Oleksiy Kryvtsov, Xu Zhang We measure soft information contained in the congressional testimonies of U.S. Federal Reserve Chairs and analyze its effect on financial markets. Increases in the Chair’s text-, voice-, or face-emotion indices during these testimonies generally raise stock prices and lower their volatility. Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Financial markets, Monetary policy communications JEL Code(s): E, E5, E52, E58, E7, E71
Uncertainty and Monetary Policy Experimentation: Empirical Challenges and Insights from Academic Literature Staff Discussion Paper 2022-9 Matteo Cacciatore, Dmitry Matveev, Rodrigo Sekkel Central banks face considerable uncertainty when conducting monetary policy. The COVID-19 pandemic brought this issue back to the forefront of policy discussions. We draw from academic literature to review key sources of uncertainty and how they affect the conduct of monetary policy. Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Monetary policy and uncertainty, Potential output JEL Code(s): E, E3, E5
Cash and COVID-19: What happened in 2021 Staff Discussion Paper 2022-8 Heng Chen, Walter Engert, Kim Huynh, Daneal O’Habib, Joy Wu, Julia Zhu Using data from the Bank Note Distribution System and consumer surveys, we find that bank notes in circulation remained high through 2021. Canadians continued to rely on electronic methods of payment, but a significant share also continued using cash for payments. Content Type(s): Staff research, Staff discussion papers Topic(s): Bank notes, Central bank research, Coronavirus disease (COVID-19), Digital currencies and fintech, Econometric and statistical methods JEL Code(s): C, C1, C12, C9, E, E4, O, O5, O54
March 25, 2022 A world of difference: Households, the pandemic and monetary policy Remarks (delivered virtually) Sharon Kozicki Federal Reserve Bank of San Francisco Macroeconomics and Monetary Policy Conference San Francisco, California Bank of Canada Deputy Governor Sharon Kozicki discusses how differences among households affect economic outcomes, how shocks can have important uneven effects across households, and why these things matter for monetary policy. Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Economic models, Housing, Inflation and prices, Labour markets, Monetary policy, Monetary policy framework, Recent economic and financial developments
March 25, 2022 Household differences and why they matter Speech summary Sharon Kozicki Federal Reserve Bank of San Francisco Macroeconomics and Monetary Policy Conference San Francisco, California Deputy Governor Sharon Kozicki talks about why differences in income, wealth and debt across households are important for the economy and what the Bank of Canada will be watching for as interest rates rise. Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Economic models, Housing, Inflation and prices, Labour markets, Monetary policy, Monetary policy framework, Recent economic and financial developments
A Horse Race of Alternative Monetary Policy Regimes Under Bounded Rationality Staff Discussion Paper 2022-4 Joel Wagner, Tudor Schlanger, Yang Zhang We introduce bounded rationality in a canonical New Keynesian model calibrated to match Canadian macroeconomic data since Canada’s adoption of inflation targeting. We use the model to quantitatively assess the macroeconomic impact of alternative monetary policy regimes. Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Economic models, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E27, E3, E4, E5, E52, E58
Predicting the Demand for Central Bank Digital Currency: A Structural Analysis with Survey Data Staff Working Paper 2021-65 Jiaqi Li How much of a CBDC would Canadian households want to hold, and what design features of a CBDC would they care about? Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Digital currencies and fintech JEL Code(s): E, E5, E50, E58
December 15, 2021 Building on success Speech summary Tiff Macklem Empire Club of Canada Toronto, Ontario Governor Tiff Macklem speaks about the Bank of Canada’s monetary policy framework review and the agreement between the Government of Canada and the Bank to renew the 2 percent inflation target. Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Central bank research, Coronavirus disease (COVID-19), Credibility, Expectations, Inflation and prices, Inflation targets, Labour markets, Monetary policy, Monetary policy and uncertainty, Monetary policy communications, Monetary policy framework, Monetary policy implementation, Recent economic and financial developments
December 15, 2021 Our monetary policy framework: Continuity, clarity and commitment Remarks (delivered virtually) Tiff Macklem Empire Club of Canada Toronto, Ontario Governor Tiff Macklem discusses the Bank of Canada’s renewed monetary policy framework. He reviews Canada’s experience with flexible inflation targeting and explains why the Bank and the Government of Canada agreed to renew the 2 percent inflation target. Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Coronavirus disease (COVID-19), Credibility, Expectations, Inflation and prices, Inflation targets, Labour markets, Monetary policy, Monetary policy and uncertainty, Monetary policy communications, Monetary policy framework, Monetary policy implementation, Recent economic and financial developments