Key facts
- The Bank of Canada urged financial institutions to use its Standing Liquidity Facility for overnight liquidity without fear of being seen as stressed.
- The central bank and Canada's banking regulator, the Office of the Superintendent of Financial Institutions, stated that Standing Liquidity Facility advances are considered normal.
- The Standing Liquidity Facility provides financial institutions in the Lynx payment system with fully secured intraday and overnight credit.
- The Bank of Canada is working to strengthen its repo clearing infrastructure with a new tri-party platform.
The Bank of Canada, in a joint statement with the Office of the Superintendent of Financial Institutions, encouraged financial institutions to utilize the Standing Liquidity Facility (SLF) for overnight liquidity needs without concern that it might signal financial stress. Deputy Governor Toni Gravelle stated that the use of the SLF is viewed as a normal component of daily liquidity management.
The SLF is a high-value payment system operated by the Bank of Canada that offers fully secured intraday and overnight credit to financial institutions participating in the central bank's Lynx payment system. This facility assists institutions in settling payments throughout the day and at the end of the day.