Backgrounder: Draft Liquidity Adequacy Requirements Guideline (2027)

Overview

The Office of the Superintendent of Financial Institutions (OSFI) is launching a 60‑day public consultation on the draft Liquidity Adequacy Requirements (LAR) Guideline for 2027. This consultation is part of OSFI's regular update cycle to ensure the guideline keeps pace with Canada's evolving financial landscape.

The LAR Guideline sets out how OSFI monitors whether financial institutions can meet their obligations in cash or with assets that can be quickly converted to cash. It helps ensure federally regulated banks, bank holding companies, and trust and loan companies can handle deposit withdrawals and meet payment and settlement obligations even in periods of stress.

The proposed updates to the guideline aim to ensure liquidity requirements remain risk-based while improving the clarity and consistent application of OSFI's liquidity rules. The updates include targeted changes to high‑quality liquid asset classifications, selected net stable funding ratio treatments, and housekeeping updates to improve structure and readability.

Once finalized, OSFI will reflect the updates in regulatory returns.

Why it's important

Liquidity risk is one of the biggest risks faced by deposit‑taking institutions. If an institution cannot access sufficient liquidity during a stress event, losses can occur quickly and confidence can erode.

The draft LAR Guideline (2027) is intended to further strengthen the resilience and stability of the Canadian financial system, while ensuring that liquidity requirements remain proportionate and risk‑based. The proposed updates seek to sharpen institutions' focus on managing liquidity risk, while taking into account regulatory burden and the need for institutions to operate competitively and take reasonable risks.

By better aligning liquidity requirements with underlying risks, the proposed updates can also help avoid unnecessary constraints on lending and market activity, supporting the smooth functioning of the financial system and the broader economy.

Next steps

The consultation is open until July 20, 2026. Stakeholders can submit comments to Consultations@osfi-bsif.gc.ca.

OSFI expects to publish the final LAR Guideline (2027), along with updated templates, reporting instructions, and a summary of consultation feedback and responses, in February 2027, with an expected effective date of May 1, 2027.