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Bank of Canada Sees Financial System Vulnerabilities Easing

  • Central bank warns risks remain elevated, measures take time
  • Growth of uninsured mortgages continues to be key worry
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Wilkins: Canada’s Economy 'Progressing Quite Strongly' 

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The Bank of Canada is optimistic higher interest rates and regulatory efforts to rein in risky borrowing will make the country’s financial system more resilient, though the process could take time to unfold and the outcome remains uncertain.

In its semi-annual financial stability report, Canada’s central bank painted a picture of a housing market where key steps have been taken to improve the quality of lending, particularly in the most expensive cities such as Toronto. At the same time, it warned risks remain elevated, particularly high household debt levels, and measures to rein in loans to the most highly indebted households will take time to work.