Bank of Canada sees financial system risk edging higher

|About: Bank of Montreal (BMO)|By:, SA News Editor

The Bank of Canada says the overall risk to the Canadian financial system has increased slightly since June 2018, but the system remains resilient.

The central bank notes slowing economic growth, global trade policy uncertainty, 2018's oil price decline, continuing difficulties in the energy sector, and expanded risk-taking in global financial markets.

A recent stress test found that large Canadian banks are well positioned to manage risks if there was a severe recession, a large correction in house prices, and a sharp repricing of risk in financial markets.

The Bank of Canada's review notes progress in vulnerabilities associated with high household debt and imbalances in the housing market, both of which have declined modestly.

"Confidence in resilience of Canada's financial systems remains high, and we are seeing improvements in some of the key vulnerabilities we've been worried about for many years," said Bank of Canada Governor Stephen S. Poloz.

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This was corrected on 05/16/2019 at 02:01 PM. Corrects date in first bullet to 2018.