The Bank of Canada published its latest semi-annual review of the country’s financial system Thursday which concluded that risk is slightly higher than it was in December although the system is generally stable. Household debt continues to be a concern; the bank warned that in the event of job losses, many families would be unable to service debts and may default on loans and mortgages. That in turn could lead to a housing market crash.
Oil prices and long-term interest rates are also on the BoC radar as potential flash points. Governor Stephen Poloz tempered concern with an acknowledgment of the changes that have been made to financial systems globally since the crisis: “There is no question the global financial system is now more resilient, thanks to these reforms,” he said. “So, while risks may have edged higher, safeguards to protect the financial system are stronger than they were before.”
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