Bank of Canada Backs Use of Liquidity Facility in Routine Funding

The Bank of Canada has announced its support for using the Standing Liquidity Facility (SLF) as part of routine funding operations. In a joint statement, the Bank and the Office of the Superintendent of Financial Institutions (OSFI) encouraged financial institutions to use the SLF when needed for overnight liquidity without fear of stigma.

Deputy Governor Toni Gravelle emphasized that advances through the SLF are considered normal for Lynx payment system participants. This allows them to reduce reserve buffers and support market efficiency, according to Gravelle.

The Bank is also upgrading repo clearing by adopting a new tri-party platform to strengthen the term repo market and attract large corporate treasuries. The updated infrastructure aims to improve government bond market functioning and provide an additional source of short-term funding.