The federal banking regulator is keeping its domestic stability buffer on hold as it says financial system vulnerabilities, such as high household debt, remain elevated but stable, while near-term risks continue to be low despite some recent increases. Bank towers are shown from Bay Street in Toronto's financial district. (THE CANADIAN PRESS/Adrien Veczan)
The federal banking regulator has decided to keep the domestic stability buffer unchanged, indicating that while financial system vulnerabilities remain high, they are stable. Short-term risks are still low, despite a recent uptick.
The Office of the Superintendent of Financial Institutions (OSFI) announced that the buffer will stay at 3.5 percent of total risk-weighted assets.
OSFI highlighted concerns about household debt and the uncertainty around how future payment shocks, like higher interest rates on renewed mortgages, will affect household debt management.
This buffer represents the amount of capital major banks in Canada must hold to cover potential losses. It applies to Canada's six largest banks, known as domestic systemically important banks.
The buffer is reviewed and adjusted every June and December, but can be modified at other times if necessary.
