A Review of the Bank of Canada’s Support of Key Financial Markets During the COVID-19 Crisis

Joshua Fernandes and Thomas Mueller

No 2023-9, Discussion Papers from Bank of Canada

Abstract: The COVID-19 pandemic placed unprecedented strain on the global financial system. We describe how the Bank of Canada responded to the rapidly deteriorating liquidity in core Canadian fixed-income markets. We also describe how market functioning improved after the Bank intervened. The Bank implemented several emergency facilities to ease market-wide liquidity strains, restore market functioning and support the stabilization and recovery of the Canadian economy. Over time, market functioning improved, and liquidity returned to pre-pandemic levels. The Bank’s facilities helped resolve market dysfunction and ensured that credit continued to be extended to households and businesses.

Keywords: Coronavirus disease (COVID-19); Financial markets; Market structure and pricing; Monetary policy and uncertainty (search for similar items in EconPapers)
JEL-codes: E44 E58 G01 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2023-04
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
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