The Bank of Canada said it was ready to step in with support if the banking system came under severe strain. Find out more
Gravelle pointed to the 2008-2009 financial crisis and the outset of the COVID-19 pandemic as examples of where the bank had intervened in the past. But there were also lessons taken that would be addressed in the future, he said.
Gravelle said that penalty pricing – which would make the program unattractive once financial conditions improve – would be built into future extraordinary actions, which would be taken only in “extreme market-wide situations, when the entire financial system faces funding constraints.”Article content
Gravelle said if there were another massive crisis that the bank could not address through its emergency tools, “we may well be in a ‘break the glass’ situation … may resort to large scale Government of Canada bond purchases.
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