{
  "title": "Canada: Financial System Stability Assessment",
  "publication": "IMF Staff Country Reports, June 24, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2019/06/24/canada-financial-system-stability-assessment-47024",
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  "summary": "This Financial System Stability Assessment paper discusses that Canada has enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly.",
  "sections": [
    {
      "heading": "Overview and key findings",
      "content": "- Canada has \"enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly.\"\n- Significant macrofinancial vulnerabilities remain, \"notably, elevated household debt and housing market imbalances,\" which \"remain substantial, posing financial stability concerns.\"\n- \"Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance.\"\n- The financial system \"would be able to manage severe macrofinancial shocks.\"\n- \"Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario.\"\n- \"Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment.\"\n- \"Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable.\"\n- Objectives of suggested measures: \"ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.\""
    },
    {
      "heading": "Risk exposures and vulnerabilities",
      "content": "- Elevated household debt and housing market imbalances are identified as the principal sources of macrofinancial vulnerability.\n- Direct and indirect linkages to housing finance create system-wide exposure across multiple financial subsectors.\n- Small non-prime mortgage lending segment identified as a weakness within housing finance."
    },
    {
      "heading": "Resilience under stress",
      "content": "- System-wide statement: the financial system \"would be able to manage severe macrofinancial shocks.\"\n- Institution-specific outcomes:\n  - \"Major deposit-taking institutions would remain resilient.\"\n  - \"Mortgage insurers would need additional capital in a severe adverse scenario.\""
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Increase required capital for mortgage exposures to strengthen through-the-cycle buffers.\n- Implement measures \"to increase risk-based differentiation in mortgage pricing.\"\n- Policy goals:\n  - \"Improve mortgage risk-pricing.\"\n  - \"Limit procyclical effects induced by housing market corrections.\""
    },
    {
      "heading": "Metadata and identifiers",
      "content": "- Publication date: June 24, 2019\n- Series: IMF Staff Country Reports\n- Title repeated: Canada: Financial System Stability Assessment\n\nSource: https://www.imf.org/en/publications/cr/issues/2019/06/24/canada-financial-system-stability-assessment-47024\n\n---\n\n Content in this bundle\n\n- Canada Financial System Stability Assessment; IMF Country Report No. 19/177; June 2019\n  - Canada Financial System Stability Assessment; IMF Country Report No. 19/177; June 2019 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Canada Financial System Stability Assessment; IMF Country Report No. 19/177; June 2019 (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
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    "Published: June 24, 2019",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781498321112.002",
    "Canada has \"enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly.\"",
    "Significant macrofinancial vulnerabilities remain, \"notably, elevated household debt and housing market imbalances,\" which \"remain substantial, posing financial stability concerns.\"",
    "\"Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance.\"",
    "The financial system \"would be able to manage severe macrofinancial shocks.\"",
    "\"Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario.\"",
    "\"Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment.\"",
    "\"Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable.\"",
    "Objectives of suggested measures: \"ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.\"",
    "Elevated household debt and housing market imbalances are identified as the principal sources of macrofinancial vulnerability.",
    "Direct and indirect linkages to housing finance create system-wide exposure across multiple financial subsectors.",
    "Small non-prime mortgage lending segment identified as a weakness within housing finance.",
    "System-wide statement: the financial system \"would be able to manage severe macrofinancial shocks.\"",
    "Institution-specific outcomes:",
    "Increase required capital for mortgage exposures to strengthen through-the-cycle buffers.",
    "Implement measures \"to increase risk-based differentiation in mortgage pricing.\"",
    "Policy goals:",
    "Publication date: June 24, 2019",
    "Series: IMF Staff Country Reports",
    "Title repeated: Canada: Financial System Stability Assessment",
    "**Canada Financial System Stability Assessment; IMF Country Report No. 19/177; June 2019**"
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      "title": "Canada Financial System Stability Assessment; IMF Country Report No. 19/177; June 2019",
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