Office of the Superintendent of Financial Institutions
The purpose of this letter is to inform you that, following its semi-annual review, OSFI has decided to maintain the level of the Domestic Stability Buffer at 1.00% of total risk-weighted assets, as calculated under the Capital Adequacy Requirements (CAR) Guideline.
March 13, 2020, OSFI communicated its decision to set the buffer at 1.00% in response to the challenges posed by COVID-19 and market conditions. OSFI indicated that no increases to the buffer would take effect for at least 18 months from that date. On
June 23, 2020, as part of the scheduled semi-annual review, OSFI announced that it would maintain the buffer at 1.00%.
The decision to continue to maintain the buffer at 1.00% reflects OSFI’s view that the reduction in March continues to be effective and appropriate, supported by fiscal and monetary policy responses as well as regulatory policy adjustments. At the same time, vulnerability levels remain elevated but stable against a backdrop of heightened uncertainty. OSFI remains ready to further release the buffer should conditions warrant.
Specific vulnerabilities covered by the buffer continue to include: (i) Canadian consumer indebtedness; (ii) asset imbalances in the Canadian market; and (iii) Canadian corporate indebtedness. In addition, global uncertainty regarding the length and effects of the pandemic remain high and OSFI continues to monitor the possibility of a spillover of external risks onto the Canadian financial system.
The Domestic Stability Buffer applies only to those federally regulated financial institutions designated as Domestic Systemically Important Banks (D-SIBs)Footnote 1.
The Domestic Stability Buffer level is maintained at 1.00% of risk-weighted assets.
The following federally regulated financial institutions are designated as Domestic Systemically Important Banks:
Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and Toronto-Dominion Bank.
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