Bafale, Spence – Expanding Competition in the Canadian Banking Sector
To: Canada’s Policymakers From: Mawakina Bafale and Andrew Spence Date: April 24, 2023 Re: Expanding Competition in the Canadian Banking Sector Canada’s recent record on business investment has been jarring in its weakness, with available capital per worker in a sustained decline that undermines the economy’s capacity for productivity growth, innovation and dynamism. This is […] Are Interest Rates Now High?
The Bank of Canada’s key policy interest rate, the target for the overnight rate, is now 425 basis points higher than in early March 2022 (0.25 to 4.5 percent). The sharp increase has led to a perception interest rates are now high and some puzzlement that has not dampened economic activity more. But are interest […] Did the U.S. financial crisis make the Bank of Canada’s job easier? – Financial Post Op-Ed
Last week, the Bank of Canada held its overnight rate, its benchmark policy rate, at 4.5 per cent. No surprises there. In its last announcement, the bank told us the data were consistent with their view that, with the target rate where it is, inflation would come back down to three per cent by the middle of this year. Data since have not changed governing council’s view that at present more tightening wasn’t necessary.
In fact, if anything, the major economic development over the last six weeks, the failures of Silicon Valley Bank (SVB) and Signature Bank, as well as the emergency takeover of Credit Suisse by UBS Group AG, made caution even more prudent. Furthermore, it might actually make the…
The Unspent Funds in Canada’s Major Municipalities
Canadian municipalities collect some revenues in advance of the outlays they will fund. This money, typically shown as flowing into reserves in municipal budgets, appears in financial statements as “deferred revenue.” Deferred revenue is a liability. It means the funds are dedicated to a certain purpose and/or a certain time. An important source of this […] Kronick, Zelmer – It’s Time to Bring Stablecoins into the Regulatory Tent
From: Jeremy M. Kronick and Mark Zelmer To: Canadian Crypto Watchers Date: April 11, 2023 Re: It’s Time to Bring Stablecoins into the Regulatory Tent The knock-on effects from the failure of Silicon Valley Bank also spread to stablecoins. The day after SVB’s failure last month, USDC, the world’s second-largest stablecoin, announced it had $3 billion on deposit with SVB and […] C.D. Howe Institute Monetary Policy Council Calls for Bank of Canada to Hold Overnight Rate at 4.50 Percent through October, Cut to 4.00 Percent by April of 2024
April 6, 2023 – The C.D. Howe Institute’s Monetary Policy Council (MPC) recommends that the Bank of Canada hold its target for the overnight rate, its benchmark policy interest rate, at 4.50 percent on April 12th, and keep it at that level for the next six months. By April of 2024, the Council recommends a cut to 4.00 percent.
The MPC provides an independent assessment of the monetary stance consistent with the Bank of Canada’s 2 percent inflation target. William Robson, the Institute’s CEO, chairs the Council.
Council members make recommendations for the Bank of Canada’s upcoming interest-rate announcement, the subsequent announcement, and the announcements six months and one year ahead. The Council’s…
Pooling Piggybanks: The Case for Combining Ontario’s Municipal Reserves
Public-sector investment funds (especially pension funds) have been increasingly pooled and managed by investment management firms in Ontario. Pooled asset management generates a net benefit to public-sector spending patterns by realizing benefits from economies of scale, including reducing costs associated with the duplication of fund management while also enhancing risk management. However, a focus on […] Stablecoin could be really useful money so let’s regulate it like money – Financial Post Op-Ed
The knock-on effects from the failure of Silicon Valley Bank also spread to stablecoins. The day after SVB’s failure, USDC, the world’s second-largest stablecoin, announced it had $US3 billion on deposit with SVB and promptly, but briefly, lost its peg to the U.S. dollar. Some people will see this as another nail in stablecoin’s coffin. In our view, it’s another example of why the federal government needs to establish a legal and regulatory framework for stablecoins that seek to serve as money. If it aims to be money, and it could be money, let’s regulate it like money.
Bitcoin may get all the headlines, but without any asset backing it, it has no future as money. Stablecoins do. They are crypto assets in that they…
Kronick, Munn – Six Banking Lessons From the Moment
From: Jeremy M. Kronick and Duncan T. Munn To: Financial Sector Regulators Date: March 27, 2023 Re: Six Banking Lessons From the Moment With the implosion of systemically important Credit Suisse, the reverberations from Silicon Valley Bank’s failure continue to rattle regulators, investors, and Canadians alike. What is the risk of further financial contagion, globally and for Canadians […] Jeremy M. Kronick – Five Policies to Scale our SMEs
From: Jeremy M. Kronick To: Canada’s Governments Date: March 20, 2023 Re: Five Policies to Scale our SMEs These days, it often feels like we don’t agree on much. But higher income growth is one thing all Canadians should be able to support. One way to achieve this growth is to see young businesses grow into large ones. While […] Fallout from Silicon Valley Bank with Peter Hall
What does the collapse of Silicon Valley Bank in California mean for Canada? In episode five of the C.D. Howe Institute Podcast, Elevate Export Finance’s Peter Hall tells host Michael Hainsworth that SVB can learn a lot from our financial expertise, and that Canadian banks may benefit from the need for capital in Silicon Valley.
Duncan Munn – The SVB Collapse was a Tale Foretold
From: Duncan Munn To: Canadians Concerned About Financial Stability Date: March 14, 2023 Re: The SVB Collapse was a Tale Foretold It is said that crises happen slowly at first, and then all at once. Silicon Valley Bank’s shocking 48-hour collapse took many by surprise. Yet trouble signs were apparent, most notably, the classic asset liability mismatch that ultimately […]