Bank of Canada watching for potential spillovers from global banking stresses
A senior Bank of Canada official says the central bank is keeping a close eye on the stresses to the global banking system ahead of its next interest rate decision and monetary policy report in April.
In a speech to the National Bank financial services conference, Bank of Canada deputy governor Toni Gravelle said Wednesday the bank is watching for any further effects from the recent banking problems in the U.S. and Europe.
"We will consider the macroeconomic impact of this evolving situation as we put together our next projection," Gravelle said.
"We'll be looking specifically at potential spillovers into the real economy to the extent that financial conditions tighten and there are broader confidence effects."
U.S. regulators had to take control of Silicon Valley Bank as well as Signature Bank earlier this month to prevent wider financial problems amid a run on deposits, while Swiss authorities helped UBS to acquire Credit Suisse after its rival ran into difficulties.
Gravelle said global banks are more resilient today than they were 15 years ago, at the outset of the global financial crisis.
"With the reforms put in place since then, global banks are required to have substantially increased their capital and liquidity buffers, making the system safer and better able to withstand stress," he said.
Gravelle said while the Canadian banking system has an international reputation for stability, it is not immune to events happening elsewhere and that financial stresses that arise outside of Canada can negatively affect things here.
He said the Bank of Canada is ready to act in the event of severe market-wide stress and provide liquidity support to the financial system.
The Bank of Canada's next interest rate decision and monetary policy report is set for April 12.
The central bank kept its key policy rate on hold at 4.50 per cent at its interest rate decision on March 8. It was the first time the Bank of Canada did not raise rates since it began hiking them last year in an effort to bring inflation under control.
This report by The Canadian Press was first published March 29, 2023.
MORE Business News
opinion | Should you take advantage of the First Home Savings Account?
Personal finance contributor Christopher Liew explains how First Home Savings Accounts work, who’s eligible for the program, and outlines the contribution rules.
opinion | Find out how much contribution room is left in your RESP to avoid penalties
Opening a Registered Education Savings Plan (RESP) is a great way to fund your child’s future education. Personal finance contributor Christopher Liew outlines the contribution rules for RESPs and explains how to find out how much contribution room you have left so that you can avoid penalties.
opinion | Is it a good time to buy a new vehicle?
If you're like many would-be vehicle shoppers, you may be wondering when prices will finally drop. The good news is that the vehicle market seems to be finally stabilizing, says personal finance contributor Christopher Liew.
opinion | How to get the most out of your grocery rebate
Personal finance contributor Christoper Liew shares the latest information about who’s eligible for the grocery rebate, when they can expect their payments, and some helpful tips on making the most of your grocery rebate.
opinion | Dos and don'ts of money while travelling
As a former financial advisor, I’ve always been fascinated by how the 'culture' around money differs from one region of the world to another,' writes personal finance commentator Christopher Liew. 'Today, I’ll outline some of the interesting money habits that I’ve noticed while travelling the globe, starting with some of our own!'
opinion | How much of a raise should you ask for in a time of high inflation?
With the rising cost of food and living expenses, you might be considering asking for a raise. On CTVNews.ca, personal finance contributer Christopher Liew explains how inflation could determine the extent of your raise, as well as other key factors.
opinion | Top sources of passive income for Canadians looking to earn more
On CTVNews.ca, personal finance contributor Christopher Liew explores some of the top sources of passive income in Canada, for those looking to increase their earnings.
Owe money to the CRA? Here are some repayment options
Getting an income tax refund can be a happy bonus for your household budget, but an unexpected tax bill can be an unpleasant surprise, especially if you don't have the cash on hand to pay it.