Canada: Financial Sector Assessment Program-Technical Note on Systemic Liquidity Assessment
IMF Staff Country Reports, August 8, 2025
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- Published: August 8, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229021814.002
Key findings on systemic liquidity and resilience
- Confidence in the resilience of the Canadian financial system is strong but liquidity risks warrant attention.
- The financial system is strong thanks to the well-capitalized banking sector and the well-regulated financial system.
- The Canadian financial system has demonstrated resilience during past episodes of turmoil.
- Ongoing structural shifts in the unsecured Canadian funding market merit close monitoring and assessment of whether to bolster that market.
Market structure, data gaps, and transparency
- Authorities should maintain efforts to enhance efficiency and liquidity in the domestic secured funding market.
- Addressing data gaps and enhancing data-sharing and transparency of domestic funding markets are priorities.
- Despite progress in trade-level data for the repo market, a comprehensive market view is still missing.
Bank of Canada (BOC) operational and policy recommendations
- The Bank of Canada should clarify the eligibility of the bilateral standing facilities and its emergency lending assistance policy, explicitly confirming that liquidity support is not restricted to recovery and resolution cases.
- To enhance responsiveness to evolving market risks, the BOC should increase the frequency of its collateral haircut calibration and its operational tests.
- Increasing the frequency of these calibrations and tests would help ensure that the BOC framework remains effective and adaptive.
Consolidated policy recommendations
- Maintain and further enhance efficiency and liquidity in the domestic secured funding market.
- Monitor structural shifts in the unsecured funding market and assess merits of market strengthening measures.
- Address data gaps and improve data-sharing and transparency across domestic funding markets to achieve a comprehensive market view.
- Clarify the scope and eligibility of BOC bilateral standing facilities and emergency lending assistance, including explicit confirmation that liquidity support is not restricted to recovery and resolution cases.
- Increase frequency of collateral haircut calibration and operational testing at the BOC to improve adaptability to market risks.
Source: IMF Staff Country Report No. 2025/233, "Canada: Financial Sector Assessment Program-Technical Note on Systemic Liquidity Assessment".
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