James A. Haley – Securing The Recovery
From: James A. Haley To: Canada’s Policymakers Date: June 23, 2020 Re: Securing the Recovery COVID-19 threatens the economic security of all Canadians. It has already led to massive unemployment; it could yet unleash a wave of business failures. Existing bankruptcy frameworks resolve creditor coordination problems and promote orderly restructurings. They are not designed to deal with an […] Guidelines and Creativity Key to Restoring Financial Confidence: Crisis Working Group on Monetary and Financial Measures
June 22, 2020 – Governments and regulators should set out guidelines to allow for creativity in encouraging investments, such as a “sandbox” where innovative approaches can be tested, according to a new C.D. Howe Institute working group report.
The C.D. Howe Institute Crisis Working Group on Monetary and Financial Measures argues such measures would increase the confidence of lenders and investors when engaging with businesses.
The group, co-chaired by David Dodge, former Governor of the Bank of Canada, and Mark Zelmer, former Deputy Superintendent, OSFI, also tackled issues such as the underwhelming uptake of certain support measures offered by governments, uncertainty on future policy responses to the pandemic,…
Don’t Force Canadian Banks To Cut Dividends – Financial Post Op-ed
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…
Randy Bauslaugh – Esg Investing Will Get A Boost From The Pandemic
From: Randy Bauslaugh To: Businesses and institutional investors Date: June 3, 2020 Re: ESG Investing Will Get a Boost from the Pandemic Pension fund fiduciaries and other institutional investors in Canada are increasingly using environmental, social and governance (ESG) considerations to better understand and predict financial risks and opportunities. They have become, in recent years, […] Kronick, Robson – Making Sure Zombie Firms Aren’t Propped Up Post-covid
From: Jeremy M. Kronick and William B.P. Robson To: Bill Morneau, Minister of Finance Date: May 21, 2020 Re: Making sure zombie firms aren’t propped up post-COVID COVID-19 has put much of Canada’s economy on life support. As we emerge from the crisis and resume more normal activity, a challenge awaits. We do not want viable businesses to […] Once the crisis is over, we will need to let the zombie firms go – Financial Post Op-Ed
COVID-19 has put much of Canada’s economy on life support. As we emerge from the crisis and resume more normal activity, a challenge awaits. We do not want viable businesses to disappear. But we also do not want zombie firms to live on indefinitely.
Early in the crisis, governments reasonably prioritized supporting households and businesses through central banks, government lenders and transfer payments. Going big and broad made sense to help us survive the sudden stop.
We now need to navigate a different problem: letting firms go. In an ordinary year an amazing number of businesses in Canada appear and disappear. In 2017, 143,000 businesses came into existence — about one for every eight that already existed. That…
Kronick, Munn – Ensuring Capital For The Recovery
From: Jeremy M. Kronick and Duncan T. Munn To: Financial Sector Regulators Date: May 11, 2020 Re: Ensuring Capital for the Recovery The COVID-19 crisis has ravaged economies and damaged private sector balance sheets all around the world, Canada included. The Bank of Canada has seen its balance sheet more than triple in the last […] Calibrating Macroprudential Policies for the Canadian Mortgage Market
While the effects of the COVID-19 outbreak on the housing market are yet unknown, a new C.D. Howe Institute report provides a blueprint for policymakers and regulators on the tools and timing of interventions in the housing market to address threats to financial stability. In “Calibrating Macroprudential Policies for the Canadian Mortgage Market,” authors Scott […] Expanded Bank of Canada Balance Sheet Requires Balancing Act: Crisis Working Group on Monetary and Financial Measures
April 23, 2020 – Between early March and mid-April, the Bank of Canada’s balance sheet more than doubled, dwarfing anything seen in 2008. Moreover unlike 2008, this increase has serious implications for future inflation, because the Bank’s increased liabilities are not the result of government deposits, but rather increased “settlement balances” or deposits by financial institutions, which increases the monetary base.
Once the pandemic and economic crisis passes there is no easy solution to the potential inflation problem arising from more money chasing fewer goods and services. Trying to unwind the Bank’s balance sheet by selling longer-term assets is fraught with political risk. Alternatively, while a floor system could help…
Hugh O’reilly – Regional, Economically Important Credit Unions Must Be Included In Stlf
From: Hugh O’Reilly To: Bill Morneau, Minister of Finance Date: April 16, 2020 Re: Regional, Economically Important Credit Unions must be Included in STLF The Bank of Canada has made a series of interventions designed to support Canada’s financial system and ensure the availability of credit during the COVID-19 crisis. These actions are important to ensure that small […] David Powell – Filling The Gap: Support Still Needed For Canada’s Asset-based Finance Sector
To: Department of Finance From: David Powell Date: April 13, 2020 Re: Filling the Gap: support still needed for Canada’s asset-based finance sector The pandemic-induced economic crisis is both unexpected and unique. Otherwise financially viable individuals and businesses may be unable to make their lease or loan payments, which poses the threat of cascading defaults […] David Losier – Government Guaranteed “ready For Business” Cash Flow Loans
To: The Department of Finance From: David Losier Date: April 6, 2020 Re: Government guaranteed “ready for business” cash flow loans Many economists are predicting a V-shaped recession, deep and temporary. Fact is, the V will probably be a lopsided U, a sharp downturn followed by a flat line and a sloping recovery. The longer […]