BoC: Canada’s financial system remains resilient as vulnerabilities show further signs of easing

Below are the key quotes from the Bank of Canada’s recently published Financial System Review (FSR).

• High household indebtedness and housing market imbalances remain the most important vulnerabilities.
• The impact of higher interest rates and the changes to the mortgage guidelines have reduced credit growth and improved the quality of new lending.
• The third main vulnerability highlighted in the FSR concerns cyber threats to an interconnected financial system.  
• The most important risk is a severe nationwide recession leading to a rise in financial stress.
• Other key risks are a house price correction in overheated markets and a sharp increase in long-term interest rates driven by higher global risk premiums.