In its annual financial stability report, the Banque du Canada said that the trade war with the United States threatens the Canadian economy and has risks for financial stability by Reuters.
Main to remember
“In extreme circumstances, market volatility could turn into market dysfunction.”
“The Canada's financial system is resilient; banks are well placed to deal with a stressful period.”
“The main short -term concern is the disorderly market risk of the market; in extreme crisis, the authorities may have to provide liquidity.”
“The severe and sustainable world trade war could push the rate of mortgage arrears beyond the levels observed in 2008-2009.”
“If household and companies' credit defects should occur on a large scale, banks could see more important losses than they provided.”
“In a stressful period, hedge funds may have a hard time maintaining their presence in the government's markets of Canada.”
“BOC is less concerned with the impact of borrowing costs raised on the ease of debt service than a year ago.”
“More than 90% of mortgage holders with fixed rate mortgages at 5 years should be able to make higher payments.”
“Credit losses could lead banks to reduce loans and this could exacerbate an economic slowdown.”
“Also look at the availability of credit and conditions for the financing and liquidity of the market.”
“RA monitoring the indicators of financial stress and evidence of precautionary behavior by participants in the financial system.”
Market reaction
The USD / CAD did not show any immediate reaction to this publication and was last seen by winning 0.25% per day at 1.3872.
