Canada: Financial Sector Assessment Program-Technical Note-Systemic Risk Oversight and Macroprudential Policy
IMF Staff Country Reports, January 24, 2020
Source details
- Canonical URL
- Canada: Financial Sector Assessment Program-Technical Note-Systemic Risk Oversight and Macroprudential Policy
Other formats
Bibliographic details
- Published: January 24, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513527185.002
Summary of the Technical Note
- Provides a summary of the review of systemic risk oversight arrangements and macroprudential policy issues in Canada.
- Discusses existing systemic risk oversight arrangements and potential challenges.
- Presents steps to modernize the framework to ensure effectiveness going forward.
- Focuses on systemic risk surveillance (current approaches and challenges such as data gaps and coordination) and macroprudential policy issues (toolkit, current policy stance, and overall policy effectiveness).
- Concludes that steps can be taken to improve the current system with a more formalized arrangement for systemic risk oversight.
- States that a single body in charge of systemic risk oversight would be the first-best option.
- Recommends that, over time, the authorities should review whether systemic risk oversight under the Heads of Agencies Committee leadership with no statutory mandate is adequate.
- Notes that macroprudential policy at the federal level has been effective; however, better coordination is essential given multiple provincial authorities’ ownership of prudential tools.
Systemic Risk Surveillance: Current Approaches and Challenges
- Emphasis on systemic risk surveillance as a core focus of the review.
- Identified challenges:
- Data gaps.
- Coordination issues among authorities.
- Suggested modernization steps aimed at ensuring the effectiveness of surveillance going forward.
Macroprudential Policy: Toolkit, Stance, and Effectiveness
- Reviews the macroprudential toolkit available in Canada.
- Assesses the current policy stance.
- Evaluates overall policy effectiveness:
- Concludes federal-level macroprudential policy has been effective.
- Highlights the need for better coordination because multiple provincial authorities own prudential tools.
Key Recommendations and Institutional Options
- Move toward a more formalized arrangement for systemic risk oversight.
- Establish a single body in charge of systemic risk oversight as the first-best option.
- Review whether systemic risk oversight under the Heads of Agencies Committee leadership with no statutory mandate remains adequate over time.
- Improve coordination between federal and provincial authorities given the provincial ownership of prudential tools.
Content in this bundle
- 1canea2020004