Statement from the Superintendent of OSFI: Restarting our policy development work with the financial sector

For release July 13, 2020

It has been a challenging and uncertain time for many Canadians. Since the beginning of the pandemic, Canadians, governments, businesses, and organizations across the country have adapted and shown remarkable resilience during very extraordinary circumstances. I am sure we can all agree that this past spring was difficult for our economy. Like many others, OSFI responded quickly to the COVID-19 pandemic.

Our efforts began in March, when we released part of the Domestic Stability Buffer (DSB). This buffer is made up of capital that the six largest banks are required to hold in reserve and build up in favourable times so that it can be released when economic conditions become challenging. This action helped ensure that banks could continue to provide financial services and lending activities during a period of economic stress and cushioned some of the economic shocks for these institutions. When OSFI released approximately $300 billion in lending capacity for Canada's largest banks, we also instructed institutions to suspend share buybacks and not to increase dividend payments. This underlined the focus on its clear purpose to support lending and absorb losses.

Additionally, we made a series of regulatory adjustments such as extending reporting deadlines, and delaying the implementation for a number of planned regulatory changes for the banks, insurers and private pension plans we supervise. OSFI also suspended consultations and policy development. These measures were designed to reduce operational stress on institutions so that efforts could be focused on helping Canadians and Canadians businesses until conditions became more stable.

As the country takes steps towards economic recovery, we must now look ahead. That is why in the fall we plan to gradually restart OSFI's policy development work.

It is clear that while conditions have become more stable, risks and uncertainty remain in the financial sector. OSFI will remain ready to act to ensure that the work we do keeps pace and responds appropriately to Canada's economic environment. We will continue to look forward when developing guidance and approaches that support reasonable risk taking but at the same time provides the necessary safeguards for depositors, policyholders and private pension plan beneficiaries.

More details will be available this summer and throughout the fall on how we will be resuming our policy work. This will include adjusting both the content and pace of what we do to reflect the new economic and operational environment. To aid us in determining this, we will seek input from the sectors we supervise to make the necessary adjustments.

OSFI will continue to monitor the economic environment and ensure that the regulatory adjustments we make continue to follow our principles of being credible, consistent, necessary and fit-for-purpose. OSFI is planning for our new normal; but at our core, we remain ever vigilant so that the Canadian financial system remains strong and resilient.