Bank of Canada

ISC Reports Solid Start to 2024

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수요일, 5월 8, 2024

Investment, News, PIN, MD, CPI, Webcast, Disclosure, Bank of Canada, Environment, Public expenditure, Audit committee, Bank, ISC, Bank statement, Beauty salon

Refer to “Caution Regarding Forward-Looking Information” in Management’s Discussion & Analysis for the three months ended March 31, 2024.

Key Points:

Refer to “Caution Regarding Forward-Looking Information” in Management’s Discussion & Analysis for the three months ended March 31, 2024.
However, the robustness and diversity of our business means we are well‐positioned to deliver on our expectations for 2024 and beyond.
The Registry Operations segment is anticipated to remain as a strong free cash flow and adjusted EBITDA contributor in 2024.
This news release provides a general summary of ISC’s results for the quarters ended March 31, 2024, and 2023.

Connect with the best thinkers, leaders and innovators in payments at The SUMMIT

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수요일, 5월 8, 2024

FINTRAC, Interac, Ecosystem, Artificial intelligence, Bank of Canada, Payments Canada, Supervision, Automotive Building, Bank, System, Australian Payments Network, Medicine, Growth, IBM

With over 200 speakers and 1,800 in-person attendees, The SUMMIT will be a dynamic and thought-provoking gathering of Canadian and international leaders from across the payment ecosystem.

Key Points:

With over 200 speakers and 1,800 in-person attendees, The SUMMIT will be a dynamic and thought-provoking gathering of Canadian and international leaders from across the payment ecosystem.
This year, The SUMMIT will explore a wide range of topics central to the future of payments in Canada and around the world, including artificial intelligence, cyber security and faster payments.
Ron Morrow, Executive Director, Payments, Supervision and Oversight, Bank of Canada discussing the evolution of the Canadian payments ecosystem and upcoming changes to retail payments supervision.
The SUMMIT provides a unique opportunity to connect with peers, learn about the latest trends and innovations, while shaping the future of payments in Canada.

BMO Survey: 72% of Aspiring Homeowners are Waiting for Rate Cuts Before Buying

Retrieved on:

월요일, 4월 29, 2024

Flood, Heat, Fear, Housing, BMO Capital Markets, TFSA, Heart, Parent, Mother, Wildfire, Life, Bank of Canada, Generation Z, Gen, Savings account, BMO, Bank, Cost, Grandparent, RRSP, Economics, Head, Climate, Real estate

62% believe owning a home is still one of life's biggest aspirations, but 56% of aspiring homeowners feel owning a home is unattainable.

Key Points:

62% believe owning a home is still one of life's biggest aspirations, but 56% of aspiring homeowners feel owning a home is unattainable.
The Bank of Canada left interest rates unchanged in April, but left the possibility open for a rate cut by June or July 2024.
"Demographic forces have allowed some pent-up demand to build, and market psychology is such that many are expecting rate cuts in the second half of the year," said Robert Kavcic, Senior Economist, BMO Capital Markets.
BMO SmartProgress : Customers can learn more about homeownership, budgeting, and other personal finance topics from BMO SmartProgress.

Northern Trust Pension Universe Data: Canadian Pension Plan Returns Concluded the First Quarter With an Upbeat Tone Buoyed by Rising Stock Markets

Retrieved on:

수요일, 5월 1, 2024

The first quarter of 2024 was dominated by macro-economic data flows, with particular focus on inflation and its salient components.

Key Points:

The first quarter of 2024 was dominated by macro-economic data flows, with particular focus on inflation and its salient components.
The first quarter of 2024 witnessed some bumpy days in the financial markets driven by uncertainty surrounding the timing of monetary easing.
Emerging markets witnessed positive returns for the quarter, but lagged results observed by developed markets.
The Canadian Fixed Income market, as measured by the FTSE Canada Universe Bond Index, declined -1.2% for the quarter.

Decomposing systemic risk: the roles of contagion and common exposures

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화요일, 4월 23, 2024

Tao, CIBC, Tax, RWA, Risk, European Systemic Risk Board, Research Papers in Economics, Contagion, RT, The Big Six, NBC, International, Shock, Observation, Bank of Canada, HTC, European Economic Association, The Washington Post, Great, JPMorgan Chase, Paper, GM, Environment, Political economy, Journal of Financial Economics, COVID-19, Perception, BNS, Website, Silicon, IAT, Cifuentes, Probability, Balance sheet, RAN, Medical classification, Algorithm, Information technology, Quarterly Journal of Economics, LN, Nature, European Journal, Royal Bank of Canada, Technical report, Journal of Political Economy, Equitable Bank, Bankruptcy, RAI, PDF, Private, ECB, Policy, CHS, Supercapacitor, Social science, Journal of Financial Stability, Intelligence (journal), Elsevier, Home, Cambridge University Press, Journal, Springer Science+Business Media, Research, Classification, Regulation, News, EQB, Credit, Literature, AIK, European Central Bank, COVID, SVAR, Section 5, Management science, DRA, M4, VL, National bank, Government, ISSN, BMO, Panel, International Financial Reporting Standards, BIS, FIS, Basel III, Commerce, Scotiabank, C32, Econometric Society, Interbank, Fraud, Section 4, Bank, Schedule, VAR, Section 3, The Journal of Finance, RBC, Volcanic explosivity index, Fire, Wassily Leontief, Financial economics, Metric, Section 2, L14, Central bank, Superintendent, Bank of Montreal, Kronecker, BOC, Lithium, BCBS, Sale, Macroeconomic Dynamics, Christophe, CWB, LBC, NHA, Imperial Bank, Private equity, Quarterly Journal, National Bank of Canada, C51, Canadian Western Bank, Currency crisis, JEL classification codes, Victor Drai, L.1, MFC, Silicon Valley Bank, EB, Laurentian Bank of Canada, Federal, RA1, Series, W0, FEVD, Journal of Econometrics, Aggregate, University, FRB, MB, Financial institution, Element, Health, Book, Angels & Airwaves, Common, OSFI, GFC, Reproduction, K L, Systematic, Housing, G21, Home Capital Group, Communications satellite

Abstract

Key Points:

Abstract
We evaluate the effects of contagion and common exposure on banks? capital through
a regression design inspired by the structural VAR literature and derived from the balance
sheet identity.
Contagion can occur through direct exposures, fire sales, and market-based
sentiment, while common exposures result from portfolio overlaps.
First, we document that contagion varies in time, with the highest levels
around the Great Financial Crisis and lowest levels during the pandemic.
Our new framework complements
traditional stress-tests focused on single institutions by providing a holistic view of systemic risk.
While existing literature presents various contagion narratives, empirical findings on
distress propagation - a precursor to defaults - remain scarce.
We decompose systemic risk into three elements: contagion, common exposures, and idiosyncratic risk, all derived from banks? balance sheet identities.
The contagion factor encompasses both sentiment- and contractual-based elements, common exposures consider systemic
aspects, while idiosyncratic risk encapsulates unique bank-specific risk sources.
Our empirical analysis of the Canadian banking system reveals the dynamic nature of contagion, with elevated levels observed during the Global Financial Crisis.
In conclusion, our model offers a comprehensive lens for policy intervention analysis and
scenario evaluations on contagion and systemic risk in banking.
This
notion of systemic risk implies two key components: first, systematic risks (e.g., risks related
to common exposures) and second, contagion (i.e., an initially idiosyncratic problem becoming
more widespread throughout the financial system) (see Caruana, 2010).
In this paper, we decompose systemic risk into three components: contagion, common exposures, and idiosyncratic risk.
First, we include contagion in three forms: sentiment-based contagion, contractual-based
contagion, and price-mediated contagion.
In this context,
portfolio overlaps create common exposures, implying that bigger overlaps make systematic
shocks more systemic.
With the COVID-19 pandemic starting
in 2020, contagion drops to all time lows, potentially related to strong fiscal and monetary
supports.
That is, our
structural model provides a framework for analyzing the impact of policy interventions and
scenarios on different levels of contagion and systemic risk in the banking system.
This provides a complementary approach to
seminal papers that took a structural approach to contagion, such as DebtRank Battiston et al.
More generally, the literature on networks and systemic risk started with Allen and Gale
(2001) and Eisenberg and Noe (2001).
The matrix is structured as follows:
1
In our model, we do not distinguish between interbank liabilities and other types of liabilities.
In other words, we can and aim to estimate different degrees
of contagion per asset class, i.e., potentially distinct parameters ?Ga .
For that, we build three major
metrics to check: average contagion, average common exposure, and average idiosyncratic risk.
N i j
et ,
Further, we define the (N ?K) common exposure matrix as Commt = [A

(20)

et ]diag (?C
?L

such that average common exposure reads,
average common exposure =

1 XX
Commik,t .
N i j
(22)

20

? c ),

The three metrics?average contagion, average common exposure, and average idiosyncratic risk?provide a comprehensive framework for understanding banking dynamics.
Figure 4 depicts the average level of risks per systemic risk channel: contagion risk, common exposure, and idiosyncratic risk.
Figure 4: Average levels of contagion (Equation (20)), common exposure (Equation (21)), and idiosyncratic risk
(Equation (22)).
The market-based contagion is the contagion due to
investors? sentiment, and the network is an estimate FEVD on volatility data.
For most of
the sample, we find that contagion had a bigger impact on the variance than common exposures.

A new measure of firm-level competition: an application to euro area banks

Retrieved on:

목요일, 4월 18, 2024

Glass, RPD, Journal of Economic Perspectives, Goldberg, Employment, Lead, Competition, SCP, Research Papers in Economics, TCF, Intuition, Laboratory, Euromoney, Bank of Canada, Calendar, International political economy, Manufacturing, Oxford Economic Papers, Harvard University Press, Paper, Linearity, R2, Environment, Delicatessen, System, Website, Panzar, Working paper, World Bank, Elzinga, Friends, Madiga, CPB, Investment, Lerner index, Statistics, Croatian National Bank, PDF, Elsevier, ECB, Industrial organization, Policy, Social science, JEL, Operations research, Internet, Journal, Research, Literature, European Central Bank, Journal of Economic Surveys, MRP, Commercial, Section 5, Financial intermediary, Ministry of Social Affairs, Elasticity, National bank, Government, Developed country, Cell, Tarazi, Wealth, Publishing, Springer Nature, Prudential, Marketing, Law, The Economic Journal, Lerner, L16, Business economics, OECD, International Monetary Fund, Section 4, Database, Section 3, Krieger, EMU, Section 2, Pressure, Central bank, Economics Letters, Bank, Jorgenson, Character, Sparkassen-Finanzgruppe, Life, EDS, American Economic Review, K2, Appendix, Applied economics, CEE, Palgrave Macmillan, Livret A, Bell Labs, GDP, Part, Country, Public policy, De Economist, Management, Publication, Motivation, Cooperative, Reproduction, IMF, Edward Elgar Publishing, Housing, Handbook, G21, Real estate

Abstract

Key Points:

Abstract
This paper extends Boone (2008) by introducing a competition measure at the individual
firm level rather than for an entire market segment.
We apply this extended Boone indicator to individual bank-level competition
in the loan market in the four largest euro area countries and Austria.
Our new measure of firm-level competition enriches and complements
other competition measures and provides a promising starting point for future market
power analyses.
The only measure among non-structural measures that is based on the
concept of competition as a process of rivalry is the Boone (2008) indicator.
We introduce
a new performance measure of competition by extending the Boone indicator to the
individual firm level.
Introduction
The ability to reliably measure competition is valuable to researchers, analysts, and
policymakers, especially antitrust authorities, financial supervisors, and central banks.
One broad
category of indicators often used to measure competition are structural competition
measures, such as static concentration measures, and dynamic measures, e.g., entry and
exit rates.
Out of these measures, the only measure based on the
concept of competition as a process of rivalry is the Boone indicator.
This study introduces a new performance measure of competition by extending the
Boone indicator to the individual firm level.
It thus measures the
increase in profits in percent of one percentage point increase in efficiency, with marginal
costs as measure of efficiency.
We extend the theoretical
underpinning of the measurement of competition for the entire market of Boone (2008) by
a new measure of individual firm-level competition.
A concern of the literature is the gap
between the practical application and the theoretical framework of Boone (2008).
We introduce within the same theoretical
framework a new measure of competition on firm level, the MRP.
Our new
measure significantly augments the antitrust evaluative framework by shedding light on
whether a merger results in a less competitive market.
Our novel indicator focuses on
firms? incentives to enhance their relative efficiency, as manifested in the elasticity
between relative profits and efficiency.
However, an inefficient firm that is foreclosed could be more
competitive than the larger efficient firm that relies on its scale economies.
Our new metric of competition unveils
banks? ability to influence their profitability in the short term by cutting costs relative to
their peers.
The new MRP indicator provides the ability to assess the impact
of individual banks? competitiveness on their interest rate-setting behaviour in loan
markets.
Incorporating this information promises a more refined understanding of the impact and
timing of monetary policy rates changes on the real economy.
Section 3 introduces within the Boone
(2008) theoretical framework our new measure of individual firm-level competition,
including the interpretation of the MRP.
Section 4 provides an application of our new
ECB Working Paper Series No 2925
6

individual firm-level competition measure to the loan market.
The StructureConduct-Performance paradigm (SCP) provides a traditional framework in the field of
industrial organization for analysing competition behaviour in markets.
Concentrated
markets ease the possibilities to collude implicitly or explicitly and therefore concentrated
markets result in higher prices and profits.
For example, a tougher competition
setup may lead to a reallocation of market shares, potentially forcing some firms to exit
the market.
This approach gives firms? strategic behaviour
central stage and focuses on the strategic interaction on prices and quantities, known as
conjectural variation.
Another measure from
this strand of literature is the H-statistic developed by Panzar and Rosse (1987).
The only competition measure from this performance literature where competition is the
outcome from a process of rivalry is the Boone indicator.
A continuous and monotonically increasing relationship exists between
RPD and the level of competition if firms are ranked by decreasing efficiency.
(2013) compare the Boone indicator with the price-cost margin
and conclude that the profit elasticity is a more reliable measure of competition.
The high
elasticity of profits to efficiency unequivocally indicates that the high market shares and
therefore high profits are due to high efficiency.
A firm that quickly passes changes to the input prices is seen as a price
taker with little market power.
Indicators of competition tend to measure different phenomenon and may provide
conflicting messages, as reported for European banking by Carbo et al.
Application 2: Test the ?quiet life? and related market structure hypotheses using the
MRP as competition or market structure measure.
Data
Our application to individual bank-level competition in the euro area loan market uses
balance sheet and income statement data from the Moody?s Analytics BankFocus for the
calendar years 2013-2020.
As such, most publications
on competition in the euro area includes the largest four member states.
Due to these restrictions the database was reduced to an unbalanced panel of up to 1862
banks (depending on the year) from five euro area countries.
Application 1: Measure bank competition using MRP
Looking at the distribution of the MRP for individual banks (Fig.
A similar finding for the four largest euro area countries as a group is
reported in Carbo et al.
Application 2: Test of market structure hypotheses using MRP
Our new measure of individual-bank competition can be used to test market structure
theories.
Euro area banks? market power,
lending channel and stability: the effects of negative policy rates, European Central Bank
Working Paper, 2790 (February).
A
new approach to measuring competition in the loan markets of the euro area, Applied
Economics, 43 (23), 3155?3167.
Impact of bank competition on the interest rate pass-through in the euro area, Applied
Economics, 45 (11), 1359?1380.

Central bank digital currency and monetary policy implementation

Retrieved on:

목요일, 4월 18, 2024

E41, Central bank digital currency, Atlantic Council, Research Papers in Economics, Remuneration, Norges Bank, People's Bank of China, Policy, Central Bank of Myanmar, Bank for International Settlements, Blog, Financial innovation, Sveriges Riksbank, Bank of Canada, Mechanics, Journal of Monetary Economics, Insurance, Bank of England, E42, Corridor, Quarterly Journal of Economics, Report card, Frankfurt, Appetite, American Economic Association, Digital rupee, Rosolin, RBI, PDF, Private, ECB, Committee, Inden, North Rhine-Westphalia, Bank, Canadian International Council, Social science, JEL, JMD, ECCB, Digital, Journal, Research, POC, European Central Bank, ENaira, M.A, Monetary economics, Section 5, Government, ISSN, The, Central bank, Finance, Buffer, Parliament, CBN, EONIA, Asset, ATM, Risk, International Monetary Fund, Interbank, Section 4, Ministry, Press release, Section 3, Human, Waterfall, Cryptocurrency, Economy, Swiss National Bank, PIB, Section 2, Conference, Reserve Bank, Reserve Bank of India, GBP, Progress, Road, American Economic Review, CBB, Digital currency, Agur, European Commission, International Settlement, Constraint, Money, Community business development corporation, City, Equivalence, Eligibility, Ministry of Finance, Report, Control, Civil service commission, EUR, Uncertainty, Eastern Caribbean Central Bank, Abadi, Rest, Reproduction, Fintech, IMF, Federal Reserve, LCR, Data

Key Points:

Transactional demand for central bank digital currency

Retrieved on:

목요일, 4월 18, 2024

POS, Learning, CB, E41, Calibration, Financial regulation, Interest, ATM, Oesterreichische Nationalbank, Journal of Macroeconomics, Sensitivity, Diffusion, ITunes, Bank of Canada, P2P, Safety, NBER, Benchmarking, Prevalence, SPACE, Bernoulli, Journal of Monetary Economics, E42, Paper, European Parliamentary Research Service, Apollo, Environment, Political economy, COVID-19, Review of Economic Dynamics, Abramov, Loss, Working paper, Choice, Collection, Probability, Dowd, Castrén, Face, Noise, History, Restaurant, Journal of Political Economy, ECB, Policy, Diary, Model, Utility, Clutch (eggs), Canadian International Council, Journal of Financial Stability, JEL, Digital, Bias, Journal, Research, Classification, CBDC, SARS-CoV-2, ECMI, Credit, Odds ratio, Literature, European Central Bank, Mises Institute, Monetary economics, Section 5, Occupation, E47, Financial intermediary, Government, Supermarket, Friction, Finance, BIS, Love, Bart, The Economic Journal, Education, Risk, Section 4, Privacy, Section 3, Appetite, App Store (iOS/iPadOS), Human, DNB, International finance, Section 2, Leonhard Euler, Payment, Attention, Central bank, Consumer, EPRS, Habit, American Economic Review, Confidence interval, FCO, Central bank digital currency, Exercise, Letizia, Applied economics, Digital currency, Sale, Business cycle, Amazon, Community business development corporation, Control, Chart, Proxy, American Economic Journal, LN, Bank, Fintech, IMF, Analysis, Aggregation, Cryptocurrency

Key Points:

Digital euro safeguards – protecting financial stability and liquidity in the banking sector

Retrieved on:

목요일, 4월 18, 2024

A digital euro would offer a wide range of

Key Points:

A digital euro would offer a wide range of
financial stability benefits, including safeguarding the role of public money and
strengthening the strategic autonomy and monetary sovereignty of the euro area in
the digital era.
Keywords: CBDC, digital euro, bank intermediation, financial stability risks.
A digital euro has the potential to offer a wide range of financial stability
benefits for the digital era.
A digital euro would
stimulate financial innovation among private sector entities and enhance the
efficiency and resilience of the financial system by supporting competition and
diversity within it.3 In addition, a digital euro would strengthen the strategic autonomy
and monetary sovereignty of the euro area.
A digital euro would be designed to minimise risks to the financial system.
2
The preparation phase will pave the way for a future decision on whether or not to issue a digital euro.
When gauging the implications for the euro area banking sector of introducing a
digital euro, take-up would be key, as it would determine the level of deposit
outflows.
In the latter case, the
issuance of a digital euro would not affect banks? balance sheets, since banks would return euro
banknotes to the Eurosystem in exchange for digital euro.
Banknotes and digital euro are two different
types of central bank liability, so a swap between banknotes and digital euro would only affect the
composition and not the size of the Eurosystem?s balance sheet.
In our analysis, we model only the
substitution of commercial bank deposits with a possible future digital euro.
8
The legislative proposal on a digital euro provides for the inclusion of such safeguards and establishes
specific criteria for the limits, aiming to contain the use of a digital euro as a store of value.
ECB Occasional Paper Series No 346
4

2

The added value of digital euro
safeguards such as holding limits
To understand the benefits of digital euro safeguards, such as holding limits, it
is useful to first consider the implications of introducing a CBDC without
adequate safeguards.
(2022), ?Central bank digital currency and bank intermediation: Exploring different
approaches for assessing the effects of a digital euro on euro area banks?, Occasional Papers, No 293,
European Central Bank, Frankfurt am Main, May.
deciding to adopt the digital euro, and (ii) the average amount of digital euro in a
wallet.
At the same time, as discussed in this paper, the design of a digital euro would
include effective safeguards, such as individual holding limits, to mitigate
potential financial stability risks.
ECB Occasional Paper Series No 346
15

an upper bound on the amount of digital euro in circulation, thereby addressing and
limiting financial stability concerns associated with the introduction of a digital euro.
(2023), ?A digital euro: gauging the
financial stability implications?, Financial Stability Review, ECB, November.

BC Check-Up: Investment climate shows strength in housing construction, but challenges in economic growth and major projects

Retrieved on:

화요일, 4월 9, 2024

Annual report, LLB, Growth, Chartered, Climate, Bank, Policy, Bank of Canada, FCPA, Government, Population growth, Renewable energy

"Despite these challenges, residential building investment remained strong, particularly in high density units."

Key Points:

"Despite these challenges, residential building investment remained strong, particularly in high density units."
Non-residential building investment reached $7.9 billion, up 6.5 per cent from 2022, with a notable increase in investment in institutional and governmental projects, particularly healthcare facilities.
However, B.C.’s major project inventory was valued at $373.0 billion in Q3 2023, down 4.2 per cent compared to Q3 2022.
Prioritizing a clear strategy towards a balanced budget is essential to maintaining the province’s ability to address future challenges.”