The Bank of Canada has little regulatory power. It makes up for that by publishing a bi-annual report card on the state of the financial system, the institution’s way of making sure regulators and the general public know where trouble lurks. So even though Governor Stephen Poloz can’t order many changes, he still has a chance to influence behaviour. When the central bank speaks, people tend to at least listen.
For a while now, the main story to come out of the central bank’s Financial System Review (FSR) has been the concern over the combination of record levels of household debt and extreme house prices in Toronto and Vancouver. That remained the case on November 28, when the Bank of Canada released its latest FSR.
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