BoC Financial Stability Report: Risks Elevated, but Canadian Financial System Remains Resilient
- Canada’s financial system has functioned well through a challenging year
- Financial health of Canada’s large banks has improved over the last 12 months
- Vulnerabilities have increased in parts of the financial system, though individually they appear manageable
- Risk of shocks remains elevated due to the Middle East war, U.S. trade policy and potential AI disruption to business models
- Several vulnerabilities crystallizing at once could interact and reinforce each other
- A cascading series of events could trigger a sharp loss of investor confidence, spike in liquidity demand or rapid asset sales
- Traditional safe-haven assets have not behaved as reliably as in the past
- AI may increase the speed, scale and sophistication of cyber attacks
- Payment-shock risk linked to mortgage renewals expected to fully pass by the second half of 2027