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Bank of Canada not joining Fed to increase global liquidity
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Bank of Canada not joining Fed to increase global liquidity

July 30, 2008 by · Leave a Comment
Filed under: Industry News 

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The Bank of Canada said on Wednesday it is not coordinating with the U.S. Federal Reserve and other central banks in operations to boost market liquidity.

“The Bank of Canada is not participating in this,” said Jeremy Harrison, a spokesman for the Canadian central bank. The Fed said on Wednesday it would extend a loan program it began in March after the near collapse of Bear Stearns.

The Fed’s Primary Dealer Credit Facility and its Term Securities Lending Facility, which started as six-month operations, will now be extended through Jan. 30.

The U.S. central bank also said that it will introduce 84-day Term Auction Facility loans, which it said will complement its existing 28-day TAF loans.

While U.S. policymakers have only seen limited improvements in credit market conditions, the same cannot be said for the Canadian market, said Doug Porter, deputy chief economist at BMO Capital Markets.

“While the Canadian money markets may not be operating completely normally, they’re as close to normal as the Bank of Canada believes is necessary.”

The Bank of Canada said in June it would not renew one of two 28-day term operations, known as a PRAs, citing better market conditions. Then in July it suspended the second operation, as bank funding costs continued to improve.

Source: Reuters

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