Viable Businesses Need Access to Capital​: Crisis Working Group on Monetary and Financial Measures

May 7, 2020 - Policymakers should help ensure capital is flowing efficiently to businesses best placed to drive economic growth during the recovery, according to the C.D. Howe Institute’s Crisis Working Group on Monetary and Financial Measures.  Economic recovery will hinge on viable companies being able to invest and adapt to the changing structure of the economy, avoid unsustainable debt, and replenish their working capital. To this end, the Crisis Working Group recommends policymakers and regulators take the following steps:

• Reduce uncertainty about the future course of public policy and regulation by continuing to be transparent in communication with the public.
• Reduce regulatory impediments to capital flow, through, for example, allowing life insurance companies to use their own internal risk models, thereby incenting more investment in companies and infrastructure projects that do not have public credit ratings.
• Encourage companies to take advantage of Canada’s bankruptcy and insolvency programs, which in effect, give companies with viable business models a second chance through negotiations with creditors.
• Be upfront about the criteria that will determine systemically important Canadian businesses, and if forced to invest, lean towards preferred equity

For more information, please contact: Jeremy Kronick, Associate Director, Research, C.D. Howe Institute; Laura Bouchard, Communications Manager, C.D. Howe Institute: Phone: 416-865-9935; email: lbouchard@cdhowe.org