Lender of last resort

• Central Bank Liquidity Policy in Modern Times

  Staff Discussion Paper 2024-6 Skylar Brooks

  Across several dimensions of lender of last resort policy, I highlight broad changes that have occurred since the 2008–09 global financial crisis and discuss some of the key challenges, choices and considerations facing the designers of central bank liquidity tools today.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Financial institutions, Financial markets, Financial stability, Lender of last resort JEL Code(s): D, D5, D53, E, E5, E58, E6, E61, G, G0, G01, G2, G21, G23, H, H1, H12
• March 21, 2024

  Getting to a new normal

  Speech summary Toni Gravelle CFA Society Toronto Toronto, Ontario

  Deputy Governor Toni Gravelle speaks about how the Bank of Canada will manage its balance sheet once quantitative tightening ends.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial system regulation and policies, Lender of last resort, Monetary policy implementation, Payment clearing and settlement systems, Recent economic and financial developments
• March 21, 2024

  Going back to normal: The Bank of Canada’s balance sheet after quantitative tightening

  Remarks Toni Gravelle CFA Society Toronto Toronto, Ontario

  Deputy Governor Toni Gravelle provides an update on quantitative tightening and talks about how the Bank of Canada will manage its balance sheet once normalization ends.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial system regulation and policies, Lender of last resort, Monetary policy implementation, Payment clearing and settlement systems, Recent economic and financial developments

• What has been putting upward pressure on CORRA?

  Staff Analytical Note 2024-4 Boran Plong, Neil Maru

  From the autumn of 2023 into early 2024, the Canadian Overnight Repo Rate Average (CORRA), a measure of the cost of overnight general collateral Canadian dollar repos, was consistently well above the Bank’s target for the overnight rate. We find that, among several factors, long bond positions that require repo financing are the main driver of the recent upward pressure on CORRA.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Financial markets, Interest rates, Lender of last resort, Monetary policy implementation JEL Code(s): D, D4, D5, D53, E, E4, E43, E44, E5, E52, G, G1, G12

• Central Bank Crisis Interventions: A Review of the Recent Literature on Potential Costs

  Staff Discussion Paper 2023-30 Patrick Aldridge, David Cimon, Rishi Vala

  Central banks’ actions to stabilize financial markets and implement monetary policy during crises may come with costs and side effects. We provide a literature review of these costs and discuss measures that may mitigate the negative impacts of crisis actions.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Financial institutions, Financial markets, Financial stability, Lender of last resort JEL Code(s): E, E5, E58, G, G1, G10, G2, G20

• Should Banks Be Worried About Dividend Restrictions?

  Staff Working Paper 2023-49 Josef Schroth

  A regulator would want to restrict dividends to force banks to rebuild capital during a crisis. But such a policy is not time-consistent. A time-consistent policy would let banks gradually rebuild capital and pay dividends even when their equity remains below pre-crisis levels.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Credit risk management, Financial stability, Financial system regulation and policies, Lender of last resort JEL Code(s): E, E1, E13, E3, E32, E4, E44
• March 29, 2023

  Lessons from our support of financial markets in tough times

  Speech summary Toni Gravelle National Bank Financial Services Conference Montréal, Quebec

  Deputy Governor Toni Gravelle talks about how the Bank of Canada supported markets during the COVID-19 pandemic and what we might do differently in the future. He also discusses recent turmoil in the banking system in the United States and overseas.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Coronavirus disease (COVID-19), Financial markets, Financial stability, Lender of last resort, Recent economic and financial developments
• March 29, 2023

  The Bank of Canada’s market liquidity programs: Lessons from a pandemic

  Remarks Toni Gravelle National Bank Financial Services Conference Montréal, Quebec

  Deputy Governor Toni Gravelle speaks about market liquidity measures taken during the COVID-19 pandemic, and addresses recent turmoil in the US and international banking sectors.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Coronavirus disease (COVID-19), Financial markets, Financial stability, Lender of last resort, Recent economic and financial developments

• Can regulating bank capital help prevent and mitigate financial downturns?

  Staff Analytical Note 2021-12 Alejandro García, Josef Schroth

  Countercyclical capital buffers are regulatory measures developed in response to the global financial crisis of 2008–09. This note focuses on how time-varying capital buffers can improve financial stability in Canada

  Content Type(s): Staff research, Staff analytical notes Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Credit risk management, Financial stability, Financial system regulation and policies, Lender of last resort JEL Code(s): E, E1, E13, E3, E32, E4, E44
• March 23, 2021

  Supporting markets in tough times

  Speech summary Toni Gravelle CFA Society Toronto Toronto, Ontario

  Deputy Governor Toni Gravelle talks about actions the Bank of Canada took to make sure financial markets could work smoothly during the COVID-19 pandemic. He also discusses the Bank’s plans to discontinue some programs.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial system regulation and policies, Lender of last resort, Monetary policy