Canadian institutions should not fear using liquidity facility, says Bank of Canada
TLT•The Bank of Canada urged financial institutions to use its Standing Liquidity Facility for overnight liquidity when needed, saying its use is normal and not a sign of stress. The bank is also updating its repo clearing infrastructure with a new tri-party platform.
1. Facility use seen as normal
The Bank of Canada and the Office of the Superintendent of Financial Institutions said advances through the Standing Liquidity Facility are normal. Deputy Governor Toni Gravelle said using it for overnight liquidity is part of day-to-day liquidity management, not an exceptional event or a sign of stress.
2. Repo infrastructure update
The facility provides fully secured intraday and overnight credit to participants in Canada's Lynx high-value payment system, helping them settle payments. Gravelle said the central bank is updating and strengthening its repo clearing infrastructure as it begins using a new tri-party platform intended to help develop the term repo market and attract participants such as large corporate treasuries.
