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

Author

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  • Joshua Fernandes
  • Michael Mueller

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.

Suggested Citation

  • Joshua Fernandes & Michael Mueller, 2023. "A Review of the Bank of Canada’s Support of Key Financial Markets During the COVID-19 Crisis," Discussion Papers 2023-9, Bank of Canada.
    • Handle: RePEc:bca:bocadp:23-9
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    References listed on IDEAS

    as
    1. Rohan Arora & Sermin Gungor & Kaetlynd McRae & Jonathan Witmer, 2020. "Announcing the Bankers’ Acceptance Purchase Facility: a COVID‑19 event study," Staff Analytical Notes 2020-23, Bank of Canada.
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    More about this item

    Keywords

    Coronavirus disease (COVID-19); Financial markets; Market structure and pricing; Monetary policy and uncertainty;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises

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