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Canada’s Bank Regulator Moves To Tighten Credit As Impaired Loans Surge

Canada’s bank regulator is growing increasingly concerned about a risk event. This morning the Office of The Superintendent of Financial Institutions (OSFI) raised the Domestic stability buffer (DSB) target 50 basis points (bps) to 3.5% of risk weighted assets (RWA). Banks subject to the buffer will have until November 1, 2023 to get it done. This comes after a similar-sized increase this past February, which saw the DSB hit 3x 2020-levels. Not only is the regulator increasingly worried about a risk event, but this is going to throttle credit and make borrowing more expensive. ..[Continue Reading]