Mark Zelmer – Managing The Economic Consequences Of The Coronavirus Pandemic
From: Mark Zelmer To: Bill Morneau, Minister of Finance Date: April 2, 2020 Re: Managing the Economic Consequences of the Coronavirus Pandemic The social distancing intended to slow the spread of the coronavirus has shut large segments of the Canadian and global economies, disrupting the ability to produce, consume and pay for goods and services. High uncertainty about how […] Time of the Essence for CEBA: Crisis Working Group on Monetary and Financial Measures
April 1, 2020 – The C.D. Howe Institute’s Monetary and Financial Measures Working Group, supported by a group of financial market experts, and co-chaired by former Governor of the Bank of Canada David Dodge and former Deputy Superintendent of OSFI Mark Zelmer, held its second meeting on Monday, March 30, 2020.
The working group agreed that, while there is a need for governments and central banks to monitor the effect of current crisis measures on debt and potential future inflation, these concerns are not a short-run issue and should not come at the expense of the immediate need for large-scale fiscal stimulus. To that end, the Monetary and Financial Measures Working Group recommends the following:
Quickly…Filling the Gap: Emergency Funding Programs and Asset-Based Finance in Times of Economic Crisis
Large-Scale Funding Program Needed to Bolster Asset-Based Finance During Crisis The federal government should have a large-scale funding program in place to bolster asset-based finance during the current crisis, author David Powell argues in his latest research. The asset-based finance (ABF) industry is critical to the functioning of the economy. In 2018, the value of ABF […] David Powell – Filling The Gap: Emergency Funding Programs And Asset-based Finance In Times Of Economic Crisis
To: Department of Finance From: David Powell Date: March 27, 2020 Re: Filling the Gap: Emergency Funding Programs and Asset-Based Finance in Times of Economic Crisis In times of economic crisis, the federal government should have in place a large-scale program for funding asset-based finance intermediaries. No one wants to see a repeat of the […] Enhanced Government Credit Facility Needed: Crisis Working Group on Monetary and Financial Measures
March 25, 2020 – The Institute has established an expert crisis working group for finance and monetary policy, co-chaired by David Dodge, former Governor of the Bank of Canada, and Mark Zelmer, former Deputy Superintendent of OSFI. The group’s first meeting was held on Monday, March 23, 2020.
The crisis working group is calling for an expansive government guaranteed credit facility, in tandem with various fiscal measures, to help Canadians and the business community survive the COVID-19 economic crisis. Possible features of the facility could include:
100% guarantee by the Government of Canada, and available to Canadian firms either through federal and provincially-regulated…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 […]