Finance committee  Thank you very much, and thank you for inviting me to appear today. As you mentioned, I am joined by my colleague, Ben Gully, the assistant superintendent of the regulation sector at the Office of the Superintendent of Financial Institutions, or OSFI, as it's usually called. O

Finance committee  Yes, I think I've solved that little problem. Mr. Chair, just to clarify, we reduced the domestic stability buffer by 1.25 percentage points of risk-weighted assets. That creates room for Canadian banks to do as much, if not more than, $300 billion in additional lending.

Finance committee  The banks will be reporting their financial results for the first quarter in a couple of weeks, and we will all see the state of their balance sheets at that point. When we reduced the domestic stability buffer, Canadian bank capital levels were already above the required level

Finance committee  Okay, we'll want to think of capital and liquidity as being closely related, but nonetheless as being regulated differently. Capital is the loss-absorbing capacity of banks. It's not—

Finance committee  Capital isn't held in a particular form. Liquidity, which is the ability to meet cash draws as they come up, needs to be held in a particular form in what's called high-quality liquid assets. Government-guaranteed securities are considered high-quality liquid assets, and therefor

Finance committee  Certainly the eligibility of the Canada mortgage bond as a high-quality liquid asset makes it a more attractive thing for banks to hold. That said, if Canada mortgage bonds or other government-guaranteed securities were not considered high-quality liquid assets, banks would have

Finance committee  Mr. Chair, the mortgage insurance requirement is a long-standing feature of the Canadian system. We do require, as a matter of law, as established obviously by Parliament, that mortgages that have a down payment of 20% or less must be insured against default. That insurance can c

Finance committee  One thing I would add is that some of the profit from these mortgage transactions is earned by the mortgage insurers, because a premium is paid and they have to hold capital against that. In the case of an insured mortgage, the capital is held principally not by the lender but by

Finance committee  As I said in my opening remarks, Canadians can have confidence in our financial system, because despite the extraordinary circumstances, it's a very resilient system and it's very well prepared. There is no question that the mortgage market will have some difficulties. It's too

Finance committee  Mr. Chair, in a moment I will call on my colleague to provide additional detail. I think at a high level, what's important to keep in mind is that the banks need to have the capacity to absorb losses that will arise in difficult periods like the one we seem to be entering. For t

Finance committee  Mr. Chair, as I mentioned in my opening remarks, the entire financial system is resilient and well prepared for where we are. Is our system facing challenges? Clearly it's facing challenges. Financial institutions, much like our own organization, were obliged to move many peopl

Finance committee  Mr. Chair, there are some very important differences between this situation and the global financial crisis that began in 2008. For one thing, the global financial crisis was a shock that originated within the financial system, although not the Canadian financial system but the g

Finance committee  There are two aspects to the regulation of credit cards, perhaps even three, but certainly at least two.

Finance committee  OSFI monitors the risk management practices of all portfolios, including credit cards. There are regulations in the act that governs the relationships between banks and credit-card holders. They do not cover all aspects, but they do contain disclosure provisions.

Finance committee  I'm not sure I understood the question.