## Canada: Financial Sector Assessment Program-Technical Note-Systemic Liquidity

_IMF Staff Country Reports, January 24, 2020_

## Source details

**Canonical URL:** [Canada: Financial Sector Assessment Program-Technical Note-Systemic Liquidity](https://www.imf.org/en/publications/cr/issues/2020/01/23/canada-financial-sector-assessment-program-technical-note-systemic-liquidity-48972)

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## Bibliographic details
- Published: January 24, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513527161.002

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### Scope and objectives
- Review evaluated the Bank of Canada’s (BOC’s) operational framework and its ability to manage liquidity conditions in normal times and in times of stress.
- Review assessed the functioning and resilience of key funding markets in Canada.
- Focus: Financial Safety Net and Crisis Management; systemic liquidity issues.

### Key findings
- The BOC’s framework for market operations and liquidity provision in normal times is comprehensive and well-articulated.
- System-wide liquidity conditions are stable.
- Market rates are closely aligned with the announced policy rate.
- The BOC has many channels to provide liquidity against a broad range of collateral.
- Foreign exchange markets appear liquid.
- The resilience of foreign exchange markets is increasingly important given the growing reliance on external, foreign-currency funding.

### Risks and gaps identified
- Contingency plans for market-wide liquidity support need further development.
- Specific gaps noted in contingency planning for:
  - Intervention in securities markets.
  - Provision of foreign-currency liquidity.
- Such contingency plans should be developed further and tested.

### Policy recommendations
- Develop and test contingency plans for market-wide liquidity support, including:
  - Frameworks for securities market intervention.
  - Arrangements for provision of foreign-currency liquidity.
- Maintain and leverage the BOC’s multiple channels to provide liquidity against a broad range of collateral to preserve market functioning.

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_Source: https://www.imf.org/en/publications/cr/issues/2020/01/23/canada-financial-sector-assessment-program-technical-note-systemic-liquidity-48972_