OTTAWA, ON, Dec. 17, 2024 /CNW/ - Today, the Office of the Superintendent of Financial Institutions (OSFI) announced that it will maintain the Domestic Stability Buffer (DSB) at 3.5%. This level was first announced in June 2023 and has been in effect since November 1, 2023.
The decision to hold the DSB at its current level reflects OSFI's assessment that vulnerabilities and risks facing Canada's financial system remain generally stable and systemically important banks have maintained an adequate level of capital to address emerging risks.
OSFI requires Canada's six systemically important banks to set aside a capital buffer so that it can be used to absorb losses due to unexpected shocks. The DSB enables these banks to continue lending to households and businesses during periods of financial stress.
While the DSB is an important tool, OSFI expects banks to remain vigilant and exercise sound judgement in their capital management to reflect today's risk environment.
We continue to monitor the environment closely and we will proactively make further adjustments to the DSB as conditions warrant.
More information about OSFI's decision can be found in the Decision Summary Note.
Quote
"Our decision to hold the DSB at its current level reflects the resilience of systemically important banks to absorb losses from unanticipated downside shocks and maintain the critical services they provide to Canadians. Canada's global and domestic systemically important banks must remain vigilant and continue to exercise judgment in capital management.
- Peter Routledge, Superintendent of Financial Institutions
Quick facts
- DSB decisions are based on an assessment of a wide range of information related to vulnerabilities and risks, results from recent stress tests, and supervisory judgment.
- OSFI reviews and sets the DSB level every June and December but can make changes at other times as circumstances warrant.
- The DSB applies to the total risk weighted assts held by Canada's global systemically important banks (G-SIBs) and domestic systemically important banks (D-SIBs).
- The DSB has a range from 0%-4%.
Related links
- Domestic Stability Buffer Homepage
- Opening Remarks by Superintendent Peter Routledge
- Domestic Stability Buffer – Decision Summary Note
- Domestic Stability Buffer video
- Domestic Stability Buffer design framework
SOURCE Office of the Superintendent of Financial Institutions
OSFI - Media Relations, Email: [email protected], Telephone: 343-550-9373
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