How Much Capital Should Banks Hold Against Risk?
Official title: Capital Adequacy Requirements (CAR) Guideline (2027)
Canada's banking regulator wants to update the rules on how much money banks must keep in reserve. These capital requirements act as a safety cushion—if loans go bad or markets crash, banks need enough buffer to stay solvent. The proposed changes focus on credit risk (loans that might not get repaid) and market risk (losses from trading activities).
Why This Matters
Got a mortgage, savings account, or RRSP? These rules affect how stable your bank is. Higher capital requirements mean banks are safer but might charge more for loans. Lower requirements could mean cheaper borrowing but more risk if things go wrong.
What Could Change
Banks may need to hold more capital against corporate loans and trading positions. This could affect how much they lend to businesses and at what rates. The new rules take effect January 2027.
Key Issues
- How much capital should banks hold against credit risk from corporate loans?
- What capital requirements should apply to market risk from trading activities?
How to Participate
- Review the Cover Letter and Backgrounder to understand the proposed changes.
- Review the specific chapters relevant to your feedback, such as Chapter 4 - Credit Risk or Chapter 9 - Market Risk.
- Submit your feedback to consultations@osfi-bsif.gc.ca by the deadline.