Canada: Financial System Stability Assessment-Press Release and Staff Report

This paper focuses on Canada’s 2025 Financial System Stability Assessment. Canada has a large and highly developed financial system. The banking system is concentrated with six systemically important banks accounting for 94 percent of total banking assets. Nonbank financial institutions (NBFIs) are also important and include mutual and pension funds and insurance firms. The Financial Sector Assessment Program was conducted amid slowing economic growth, trade policy uncertainty, and heightened geopolitical risks. While financial sector oversight and crisis management frameworks are robust, they could be further strengthened to proactively address emerging challenges. Enhancing cooperation and information sharing between federal and provincial authorities is essential to effectively monitor risks across the financial sector, particularly concerning NBFIs. Significant strides have been made to enhance cyber resilience and monitor climate risks and the authorities are encouraged to further build upon these efforts. Anti-Money Laundering/Combating the Financing of Terrorism supervision and enforcement should be strengthened. Safety net schemes would benefit from further harmonization across jurisdictions and the insurance resolution framework should be strengthened.