Risk of shock to financial system down, but concerns linger: Bank of Canada survey

Risk management experts believe the likelihood of a shock that could impair the Canadian financial system has decreased since last year, but concern remains around geopolitical tensions, high inflation, unemployment and household debt burdens.

Experts cite a well-capitalized banking sector and well-regulated financial system, saying they expect regulators, central banks and governments would intervene in the event of a significant shock.

Respondents who believe the likelihood of a shock is greater in the next one to three years say they are concerned that high inflation could linger and quantitative tightening could lead to deteriorated market liquidity. They say a successful cyber attack on a Canadian financial institution or major financial market infrastructure could result in system-wide disruptions, while geopolitical tensions could weigh on the pricing of risk assets globally.This report by The Canadian Press was first published May 15, 2023.

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