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Canadian institutions should not fear using liquidity facility, says Bank of Canada
The central bank said SLF borrowing is normal day-to-day liquidity management as it works to strengthen repo clearing and attract new participants.
- On Tuesday, the Bank of Canada and the Office of the Superintendent of Financial Institutions urged financial institutions to use the Standing Liquidity Facility for overnight liquidity without concern that it signals financial stress.
- The Standing Liquidity Facility operates within the central bank's Lynx payment system, providing fully secured intraday and overnight credit to help institutions settle day-to-day and end-of-day payments efficiently.
- Deputy Governor Toni Gravelle told a Bloomberg conference in New York that the BoC views SLF use as "a normal part of day-to-day liquidity management, not as an exceptional event or a sign of stress."
- Gravelle announced the BoC is updating its repo clearing infrastructure by implementing a new tri-party platform designed to develop the term repo market and attract large corporate treasuries as new participants.
- Repo markets remain essential for government bond market functioning and provide vital short-term funding; however, the BoC noted their widespread use means they can transmit financial stress if conditions deteriorate.
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Total News Sources8
Leaning Left0Leaning Right2Center4Last UpdatedBias Distribution67% Center
Bias Distribution
- 67% of the sources are Center
67% Center
C 67%
R 33%
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