 Everything You Want to Know About the Bank’s Standing Liquidity Facility… But were too afraid to ask!Kaetlynd McRae and Jessie Ziqing Chen No 2026-26, Staff Analytical Papers from Bank of Canada Abstract: The Standing Liquidity Facility (SLF) is one of the Bank of Canada’s least discussed tools—and one of its most important. Embedded directly in Canada’s high value payment system, Lynx, the SLF operates quietly in the background every business day, ensuring the smooth settlement of payments and reinforcing the implementation of monetary policy. This Staff Discussion Paper demystifies the SLF by answering the questions that are most often overlooked: how intraday and overnight advances work, what their use does (and does not) signal about liquidity conditions, how collateral eligibility and haircuts are determined, and how the facility supports both monetary policy implementation and financial system resilience. By shedding light on this “business as usual” facility, the paper shows why the SLF is the cornerstone of Canada’s liquidity framework—addressing everything you wanted to know about the SLF (and a few things you may have been afraid to ask). Keywords: Financial markets and funds management; Market functioning; Financial system; Financial institutions and intermediation; Monetary policy; Monetary policy tools and implementation; Money and payments; Payment and financial market infrastructures (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsap:26-26 Access Statistics for this paper More papers in Staff Analytical Papers from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC. |
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