OSFI Maintains Domestic Stability Buffer at 3.5%

The federal banking regulator is maintaining its domestic stability buffer, stating that financial system vulnerabilities remain high but stable, while immediate risks are low despite a recent uptick.

The Office of the Superintendent of Financial Institutions confirms that the domestic stability buffer will stay at 3.5 percent of total risk-weighted assets.

Concerns persist around household debt and the uncertainty surrounding the potential impact of future payment shocks on household debt serviceability, especially with many mortgages expected to renew at higher interest rates.

The buffer represents the amount of capital that major banks in the country must hold to cover possible losses.

This buffer specifically applies to Canada’s six largest banks, classified as domestic systemically important banks.

It is typically reassessed and set in June and December but can be adjusted at other times if necessary.

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