Bank of Canada Tracks Rapid Growth of Private Credit in Canada

The Bank of Canada is closely monitoring the growth of private credit in Canada, which has exposed investors and banks to approximately half a trillion dollars' worth of loans. These private credits are largely invisible to the public eye.

Private credit involves businesses taking out loans from non-bank lenders such as asset managers, insurers, and pension funds. A mid-sized business might turn to private credit if they need funding for growth but are too small for traditional banking services.

The Bank of Canada is concerned about the potential risks associated with this alternative credit model, which operates outside of public scrutiny.