The Bank of Canada stands ready to intervene should the financial system become strained and require additional liquidity.
Bank of Canada Deputy Governor Toni Gravelle made the comment during a speech at the National Bank Financial Services Conference on Wednesday.
“The Bank’s mandate to promote the stability of the financial system means that we’re ready to act in the event of severe market-wide stress and provide liquidity support to the financial system,” he said. “We did so during the 2008–09 global financial crisis, and we did so again during the critical market disruptions that occurred at the outset of the COVID-19 pandemic.”
But in response to a question about the overall health of Canada’s banking system, Gravelle said, “We don’t feel we’re anywhere close to being concerned in terms of financial system stress.”
During his speech, Gravelle said the Canadian banking system has a “well-earned international reputation” for stability, thanks to a combination of the structure of the system and “sound risk management in our financial institutions.”
“Canadian banks weathered the global financial crisis well, and, since then, their resilience has been further strengthened with the implementation of new, higher global standards. But we know we’re not immune to spillovers from what’s happening elsewhere,” he said.
He added that the lessons learned during the Bank’s response to the COVID-19 pandemic will allow the BoC to “further improve and better target our responses in the event of market turmoil in the future.”