Banks are often in the political and regulatory crosshairs during times of economic stress, and COVID-19 is no different. Support for the payments system and credit markets can look like support for banks themselves. And supports for businesses are controversial. Few people want to prop up firms with no future and nobody wants government credit or transfer payments to fund executive bonuses or flow to shareholders through share buybacks or unsustainable dividends. Canada’s banks have just reported weak second-quarter earnings. Laurentian Bank just cut its dividend. Should the Office of the Superintendent of Financial Institutions (OSFI) ask other Canadian banks to do the same?
If they did, they would be following a trend. The…
Bank of Canada’s next trick involves a delicate three-way balancing act - Globe and Mail Op-Ed
Even before the Bank of Canada’s interest rate announcement on Wednesday, the eyes of monetary policy watchers had shifted elsewhere – to the bank’s expanding balance sheet.
There was little surprise when the central bank left its target for the overnight rate at 25 basis points, with the deposit rate paid to banks also remaining at 25 basis points.
In fact, the target overnight rate is expected to remain where it is – a level at which the bank considers further cuts to be counterproductive – until at least well into 2021.
It is clear that the overnight rate will not be the centrepiece of the bank’s monetary policy for the foreseeable future.
Instead, the bank’s balance sheet and how it stickhandles it will…
Reopening locked-down economies is not easy. Because governments did the locking down, governments are key to the reopening. How Ontario’s government manages it, given the province’s demographic and economic weight, will have consequences across the country. Ontarians and Canadians could do better if Ontario followed the example of other jurisdictions and published a clearer and more comprehensive reopening plan.
Where can Ontario look for ideas? Its immediate Canadian neighbours, Manitoba and Quebec, are not very helpful examples. Manitoba reopened earlier but it never had a per capita caseload anything like Ontario’s. Quebec still has a worse caseload and had to backtrack on relatively aggressive early reopening plans when its…
