Bank of Canada further curtailing emergency measures

Citing further improvement in financial market conditions, the Bank of Canada is continuing to pull back liquidity support programs that were adopted in response to the disruptions caused by Covid-19.

The central bank announced that it will be scrapping the Provincial Money Market Purchase (PMMP) program, and that it will be scaling back its purchases of Government of Canada treasury bills.

The changes are being made due to “the continued improvement in the functioning of short-term funding markets and financial markets more generally,” the bank said.

In the past couple of months, the Bank of Canada has been scaling back some of the support measures that were initially adopted in response to the Covid-19 crisis.

The PMMP program, which was launched in March to support provincial government funding markets, will be discontinued on Nov. 16.

Starting Nov. 24, the central bank will shift from automatically buying 10% of Government of Canada treasury bill auctions to buying between zero and 10%.

“While the intent will be to minimize the bank’s participation over time, purchase amounts will vary depending on different factors, including prevailing market conditions and balance sheet requirements,” it said.

Finally, the bank said it has revised the terms and conditions for the standing term liquidity facility (STLF) to include terms of up to 30 days from the current term of up to 90 days.

“The bank will continue to monitor market conditions and remains committed to providing liquidity as required to support the functioning of the Canadian financial system. Any discontinued facilities can be restarted if necessary,” it said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.