Glen Hodgson – The Role Of Crown Financial Institutions During A Pandemic
From: Glen Hodgson To: Canadians concerned about COVID-19 Date: March 17, 2020 Re: The Role of Crown Financial Institutions During a Pandemic COVID-19 has quickly become a global threat, causing a massive public health response and economic dislocation. Crown financial institutions, notably Business Development Bank of Canada (BDC) and Export Development Canada (EDC), can play an important role […] The Era of Digital Financial Innovation: Lessons from Economic History on Regulation
Rapid growth in financial innovation needs regulators’ attention Economic history gives us many examples of instances when financial innovations, rapid growth in credit supply and increased reliance on short-term financing have led to financial instability and crises. Therefore, at a time of rapid changes in the financial sector, it is important that regulators pay close […] There’s a better barometer for determining Canadians’ financial fragility – Financial Post Op-ed
Over the past 25 years, Canadians’ household debt has increased steadily as a share of their disposable income. During this time, and especially since the financial crisis, they have often been told their debt levels were unsustainable and that a day of reckoning was fast approaching. And yet that day has not come. One reason why seems clear: for the most part over the past 25 years, the amount Canadians spend servicing their debt has not changed as a percentage of their disposable income.
In a recent C.D. Howe Commentary, we argue that it is primarily this “debt service ratio” (interest payments plus reimbursement of principal divided by disposable income) that determines households’ ability to make their payments at…
Kronick, Omran – Coronavirus And Supply-side Shocks
To: Fiscal Policymakers From: Jeremy M. Kronick and Farah Omran Date: February 28, 2020 Re: Coronavirus and Supply-side Shocks The news on coronavirus seems to be getting worse each day. Policymakers have rightly been focused on the health of Canadians. Meanwhile, fear has reached financial markets, which have been shedding points at alarming rates the […] Canada’s shadow banks are now too big to ignore – National Post Op-Ed
In Canada the financial services sector weathered the 2007-08 global “credit crunch” better than it did in many other developed countries. One argument for why, certainly in contrast to the U.S., was the smaller size of our “non-bank financial intermediation” (NBFI) sector, more commonly referred to as “shadow banking.” But rapid growth in the shadow sector since the crisis suggests this resilience might be under threat. What does that mean for monetary policy, financial stability and regulation? As it turns out, a lot.
Broadly speaking, the shadow sector includes investment funds, private lenders like mortgage finance companies, companies that offer private-label securitization like asset-backed securities, and more. Shadow…
Predicting Financial Crises: The Search for the Most Telling Red Flag in the Economy
February 13, 2020 – Canadians’ level of indebtedness is raising concerns on the basis of several traditional measures, but the most reliable predictor of trouble ahead is the debt-service ratio, says a new report from the C.D. Howe Institute. In “Predicting Financial Crises: The Search for the Most Telling Red Flag in the Economy,” authors […] Water in the Wine? Monetary Policy and the Impact of Non-bank Financial Intermediaries
February 4, 2020 – The rapid growth of the non-bank financial intermediation sector, formerly called shadow banking, appears to dilute monetary policy effectiveness in Canada and poses a risk to financial stability, according to a new report from the C.D. Howe Institute. In “Water in the Wine? Monetary Policy and the Impact of Non-bank Financial […] Jeremy Kronick on BNN – Growth in Non-bank Financial Intermediaries Could Weaken Monetary Policy
Jeremy Kronick, Associate Director of Research at the C.D. Howe Institute, joins BNN Bloomberg to discuss the rapid growth of the non-bank financial intermediation sector and its possible impact on the Bank of Canada’s monetary policy use.
John D. Murray – Central Banks and the Future of Money
From: John D. Murray To: Canadian financial regulators Date: January 31, 2020 Subject: Central Banks and the Future of Money Central banks around the world are now giving serious consideration to the pros and cons of making central bank digital currencies (CBDCs) available to the general public. While the consensus view in earlier periods seemed to be that any […] Jeremy Kronick on BNN – Income inequality has flatlined since financial crisis
Jeremy Kronick, Associate Director of Research at the C.D. Howe Institute, joins BNN Bloomberg to discuss the link between monetary policy, income inequality and inflation in Canada.
One More Case for Longer-Term Mortgages: Financial Stability
Longer-term mortgages would enhance both consumer choice and financial stability, but regulatory changes are needed to help them develop into a significant part of the Canadian residential mortgage market, says a new report from the C.D. Howe Institute. In “One More Case for Longer-Term Mortgages: Financial Stability,” author Michael K. Feldman notes that according to […] Modernizing the regulation of financial advice – Globe and Mail Op-Ed
Canada’s investment advisory industry has evolved through consolidation and new products to meet the needs of a more demanding and active investing public over the past two decades. Unfortunately, its regulatory structure has not kept pace. Overlapping regulatory organizations and outdated rules are limiting innovation and efficiency.
Unlike sectors in which industry must petition government agencies for regulatory relief, companies in the investment and mutual-fund industry can propose a better solution for the sector and Canadian investors. And as I argue in a recent C.D. Howe Institute report, the time is ripe for a merger.
First, a little background. The bulk of the financial advice industry operates through dealer…