The Financial Post reports in its Thursday edition that Superintendent of Financial Institutions head Peter Routledge says the economy has been more resilient in the face of higher interest rates and debt service costs than he would have guessed a year ago. The Post's Ian Vandaelle writes that Mr. Routledge remains mindful the situation could sour.
In a speech, he said certain measures the OSFI has taken in the wake of the pandemic have him confident Canada's financial system can weather the storm should a recession hit the shores.
He said: "We're not in the business of predicting recessions, but we want to make sure our system is ready to absorb and be resilient for a recession. ... We are very, very attuned to the possibility of hard times, but the economy is doing better than we expected given the spike in interest rates and the spike in debt service costs."
OSFI has taken several steps to bolster financial market stability in recent years, most recently raising the Domestic Stability Buffer by 50 basis points in June.
The DSB functions as a sort of rainy day fund to require Canada's systemically important banks to hold more capital on hand to cover potential losses due to economic hardship.
© 2023 Canjex Publishing Ltd. All rights reserved.