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To stress test the solvency of major banks in Canada, we design a global risk scenario in which economic activity contracts sharply over an extended period. Among the possible triggers for such a severe downturn is an economic setback caused by a new wave of the pandemic. 2 Our risk scenario begins with the emergence of a COVID‑19 variant spreading rapidly around the world and resistant to ...
- Asset Purchases
- Balance Sheet Expansion
- Risk Mitigation
- Reporting
The following programs have been discontinued: 1. Bankers’ Acceptance Purchase Facility (BAPF): This program supported the market for bankers' acceptances, a key source of financing for small and medium-sized corporate borrowers. 2. Canada Mortgage Bond Purchase Program (CMBP): Financial institutions use Canada Mortgage Bonds (CMBs) to finance thei...
These interventions, which involve acquiring financial assets and lending to financial institutions, increase the size of the Bank’s balance sheet. This balance sheet expansion, in conjunction with our other actions, helps get the financial system functioning properly. A well-functioning financial system helps the economy recover once the restricti...
The Bank has designed these programs in a way that prudently manages the financial risk to taxpayers. These programs mitigate risk by including term-to-maturity limits, minimum credit ratings, counterparty limits and concentration limits. When external asset managers are used, they are subject to strict conflict-of-interest requirements, well-defin...
The Bank regularly reports on the results of its large-scale asset purchase programs. Our goal is to be transparent while protecting commercially sensitive information and trade-specific detail that could impact the fair market value of the Bank’s purchases. We report the total holdings of assets purchased through these programs on our weekly and m...
Mar 22, 2023 · All eyes are on the global banking sector after sudden turmoil brought down or threatened a handful of U.S. banks and one major European bank this month. The collapse of Silicon Valley Bank (SVB ...
However, the recent downturn might result in sizable losses and a decline in bank equity. Government agencies have encouraged banks to use their capital buffers and made temporary adjustments to capital regulation as a way to reduce the impact of the reduction in bank capital on lending. Capturing how important is the capital channel requires ...
Banks are well capitalized and have sufficient liquidity buffers, making them well positioned to continue supporting the economy, even through a period of stress. However, stress in the global banking sector, like that seen in March 2023, could impact depositor and investor confidence. This could spark deposit outflows, even at healthy banks.
Aug 13, 2020 · First, governments have provided firms and workers with direct payments to substitute for their lost revenues. While this does not directly affect the banking sector, it allows borrowers to continue serving their loan repayments, and thus have an indirect positive effect on banks as losses are avoided. Second, there are direct support measures ...
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May 18, 2020 · When demand falls suddenly, the fall in output and rise in debt ratios are smaller when a rules-based fiscal stimulus is in place to support the economy. In fact, our findings suggest that when rules-based fiscal stimulus measures are adopted, economic downturns can be countered nearly as effectively as when monetary policy is able to operate at full strength.
