Canada: Financial Sector Assessment Program-Technical Note on Systemic Risk Oversight and Macroprudential Policy

This Technical Note on Systemic Risk Oversight and Macroprudential Policy discusses that the Canadian financial system has been robust to several systemic challenges in recent years as the authorities coordinated efforts on an informal basis. The Systemic Risk Surveillance Committee has led to several positive spinoffs on data sharing and coordination on specific topics. Despite the progress on risk monitoring, there has been less progress on coordinating policy actions to address risks or build resilience. The system is highly interconnected and there could be significant gains from considering spillovers of policy action as well as efficiency gains on policy design. The authorities are building capacity for monitoring all sectors, especially nonbanks. Provincial authorities should have a more flexible toolkit to allow them to take preventative action and build resilience. The process for changing policy through regulation by provincial agencies can be lengthy, even as in emergency situations changes can be made rapidly.