100 basis points in three operations, which span year - end. these central banks were already providing 7 - day unlimited u. s. - dollar liquidity and are continuing to do so. for example, in response to the sharp, synchronous global recession, the bank of canada almost doubled our balance sheet to provide the canadian financial sector with exceptional canadian - dollar liquidity. we stand ready to take similar steps if the international spillovers of the european situation prove severe. at this stage the limited direct links between our two financial sectors suggest that this is unlikely unless there is a more generalised reduction in risk appetite affecting global markets. bis central bankers ’ speeches however, the imf can only redistribute liquidity. it cannot lean against the retreat of private liquidity by creating official liquidity. the final line of defence is to adjust monetary policy if the outlook for economic activity and inflation warrant. for those economies at the zero lower bound for their policy interest rate, this would likely mean the direct provision of additional official liquidity through quantitative easing, as the bank of japan and the bank of england have done in recent weeks. conclusion in conclusion, recent history has amply demonstrated that global liquidity has an important impact on financial stability and economic growth. global liquidity has fluctuated wildly over the past five years, and we are on the cusp of another retrenchment. there are steps that can be taken to mitigate, but not eliminate, the negative effects of the current wave. how european banks choose to delever will determine which ones authorities around the world need to take. central banks remain best placed to address future surges and shortages in global liquidity. through regular private discussions, central banks understand each others ’ economic outlooks and reaction functions, thus providing the context within which they can set their own policy. at our most recent g - 20 meeting, we committed to redouble these efforts, beginning with improved monitoring of global liquidity conditions. although central bank measures can help address current volatility, such a situation is hardly ideal. over the medium term, the continuation of such extreme liquidity cycles could ultimately threaten open capital markets and a free trading system if not better addressed. there is a premium on improved oversight and regulations that reduce the procyclicality of global liquidity and make the system more resilient. the g - 20 ’ s financial reform agenda, once fully implemented, will dampen global private liquidity cycles

stephen s poloz : release of the financial system review opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the financial system review, ottawa, ontario, 16 may 2019. * * * good morning, and thank you for being here today. senior deputy governor wilkins and i are pleased to be with you to talk about the latest issue of the bank of canada ’ s financial system review ( fsr ), which we published today. let me quickly remind everyone about the purpose of the fsr — to identify key vulnerabilities in the financial system that can interact with and magnify economic shocks. we monitor the evolution of these vulnerabilities and apply extreme risk scenarios to look at the potential implications for the financial system and the economy should such a shock occur. the main vulnerabilities that we see today are the same as those in the 2018 fsr — elevated levels of household debt and imbalances in housing markets. both vulnerabilities have declined modestly over the past year. with respect to household indebtedness, the mortgage stress tests introduced last year have improved the quality of new mortgage lending. as a result, the share of new mortgages going to highly indebted households — those that owe more than 450 per cent of their income — has declined significantly. also, the number of canadians falling behind on their debt payments remains low. the combination of the revised mortgage guidelines and past increases in interest rates have helped to slow the pace of household borrowing and stabilize the overall household debt - to - income ratio in canada. these are encouraging signs, but there are important reasons for continued vigilance. first, because the total amount of debt carried by canadian households is so large, we know that it will be with us for a long time. second, a large share of this debt is with highly indebted households. and third, the decline in global bond yields since the beginning of the year has lowered canadian mortgage rates, so household borrowing is likely to pick up again. the bank is also closely monitoring the risk that stricter mortgage guidelines are shifting consumers away from federally regulated institutions and toward private lenders and credit unions, some of which are not following the federal guidelines. let me now turn to imbalances in the housing market, which have diminished overall since our last report. we continue to follow three different housing stories here in canada — the previously frothy markets in