Financial institutions

• December 15, 2015

  Residential Mortgage Securitization in Canada: A Review

  Financial System Review - December 2015 Adi Mordel

  Residential mortgage securitization plays an important role in the Canadian system of housing finance, especially given the rising share of government-supported (i.e., public) securitization over the past 15 years. Mordel and Stephens analyze the evolution of two types of mortgage securitization in Canada— private and public — focusing in particular on the underlying public policy and economic benefits of the latter. They review the potential implications of the extent of public securitization and conclude with a discussion of policies that could be considered to reinvigorate private securitization in Canada.

  Content Type(s): Publications, Financial System Review articles Topic(s): Financial institutions, Financial stability, Financial system regulation and policies, Housing JEL Code(s): G, G2, G28

• Emergency Liquidity Facilities, Signalling and Funding Costs

  Staff Working Paper 2015-44 Céline Gauthier, Alfred Lehar, Héctor Pérez Saiz, Moez Souissi

  In the months preceding the failure of Lehman Brothers in September 2008, banks were willing to pay a premium over the Federal Reserve’s discount window (DW) rate to participate in the much less flexible Term Auction Facility (TAF). We empirically test the predictions of a new signalling model that offers a rationale for offering two different liquidity facilities.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial stability, Lender of last resort JEL Code(s): G, G0, G01, G2, G21, G28
• November 19, 2015

  The Effect of Regulatory Changes on Monetary Policy Implementation Frameworks

  Bank of Canada Review - Autumn 2015 Meyer Aaron, Annick Demers, Sean Durr

  This article provides an analysis of some recent banking regulatory initiatives that are likely to influence the activities of financial intermediaries and the effectiveness of central bank monetary policy implementation frameworks. Although the effects of individual regulations can be anticipated in most cases, the combined regulatory impact is not yet clear. Central banks should, however, be able to accommodate the effects of the emerging regulatory environment within their existing policy implementation frameworks.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial institutions, Financial markets, Financial system regulation and policies, Monetary policy implementation JEL Code(s): E, E5, E52, G, G2, G21, L, L5, L50

• Credit Conditions and Consumption, House Prices and Debt: What Makes Canada Different?

  Staff Working Paper 2015-40 John Muellbauer, Pierre St-Amant, David Williams

  There is widespread agreement that, in the United States, higher house prices raise consumption via collateral or possibly wealth effects. The presence of similar channels in Canada would have important implications for monetary policy transmission.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Domestic demand and components, Economic models, Financial institutions, Financial stability, Financial system regulation and policies, Housing, Monetary policy transmission JEL Code(s): E, E0, E02, E2, E21, E4, E44, G, G2, G21, R, R2, R21, R3, R31

• Shock Transmission Through International Banks: Canada

  Technical Report No. 105 James Chapman, H. Evren Damar

  In this paper, we investigate how liquidity conditions in Canada may affect domestic and/or foreign lending of globally active banks and whether this transmission is influenced by individual bank characteristics.

  Content Type(s): Staff research, Technical reports Topic(s): Financial institutions, Financial stability JEL Code(s): E, E4, E44, F, F3, F36, G, G2, G21, G3, G32

• Cheap But Flighty: How Global Imbalances Create Financial Fragility

  Staff Working Paper 2015-33 Enrico Perotti, Toni Ahnert

  We analyze how a wealth shift to emerging countries may lead to instability in developed countries. Investors exposed to expropriation risk are willing to pay a safety premium to invest in countries with good property rights.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial stability JEL Code(s): F, F3, G, G2

• Examining Full Collateral Coverage in Canada’s Large Value Transfer System

  Staff Working Paper 2015-29 Lana Embree, Varya Taylor

  The Large Value Transfer System (LVTS) is Canada’s main electronic interbank funds transfer system that financial institutions use daily to transmit thousands of payments worth several billions of dollars.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Payment clearing and settlement systems JEL Code(s): E, E4, E47, G, G2, G21
• June 25, 2015

  Building Trust, Not Walls: The Case for Cross-Border Financial Integration

  Remarks Lawrence L. Schembri Windsor–Essex Regional Chamber of Commerce Windsor, Ontario

  Deputy Governor Lawrence Schembri discusses the need to address cross-border obstacles to greater financial integration.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Financial institutions, Financial markets, Financial stability, Financial system regulation and policies, International financial markets, International topics
• June 11, 2015

  Canadian Open-End Mutual Funds: An Assessment of Potential Vulnerabilities

  Financial System Review - June 2015 Sandra Ramirez, Jesus Sierra, Jonathan Witmer

  The authors examine the liquidity and leverage characteristics of Canadian long-term, open-end mutual funds in terms of their potential systemic effects on the Canadian mutual fund sector and on the Canadian financial system more broadly. In their overall assessment of this sector, they consider the regulation, market size and ownership structure of mutual funds in Canada and provide observations about the industry globally.

  Content Type(s): Publications, Financial System Review articles Topic(s): Financial institutions, Financial markets JEL Code(s): G, G2, G23, G28
• May 14, 2015

  Fine-Tuning the Framework for the Bank’s Market Operations

  Remarks Lynn Patterson CFA Society Vancouver Vancouver, British Columbia

  Deputy Governor Lynn Patterson discusses proposed changes to the Bank’s financial market operations.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Financial institutions, Financial markets, Financial stability, Financial system regulation and policies, Lender of last resort, Monetary policy implementation