Bank of Canada Removes Stigma from Overnight Liquidity Facility Use
The Bank of Canada has issued a joint statement with the Office of the Superintendent of Financial Institutions urging financial institutions to use its Standing Liquidity Facility without stigma. The central bank views institutional use of the SLF for overnight liquidity as standard liquidity management practice, rather than an emergency measure.
The SLF operates as a high-value payment system managed by the Bank of Canada, providing fully secured intraday and overnight credit to financial institutions participating in the central bank's Lynx payment system. This facility enables institutions to settle payments throughout the trading day and during end-of-day operations.
Deputy Governor Toni Gravelle stated that the central bank is working to update its repo clearing infrastructure, with plans to implement a new tri-party platform designed to support development of the term repo market.