Macklem Says Bank Capital Rule Change Alone Won’t Spark Lending (opens original article in a new tab)

Bank of Canada Governor Tiff Macklem said looser bank capital rules won't boost economic activity, as analysts questioned if recent regulatory changes would immediately spur more lending without borrower demand. OSFI reduced the domestic stability buffer for Canada's Big Six banks, aiming to increase lending flexibility for key sectors but noting that loan growth remains low due to weak commercial demand and a stagnant housing market.

• Bank of Canada Governor Tiff Macklem stated that looser bank capital rules alone won't boost economic activity
• OSFI reduced the domestic stability buffer by 50 basis points to 3% for Canada's Big Six banks
• Analysts noted that more bank capital alone can't prompt businesses to seek funds due to economic uncertainty
• Loan growth at Canadian banks has been low or flat due to lack of commercial demand and a stalled housing market
• OSFI's changes aim to increase lending flexibility for key sectors like infrastructure and AI but don't adjust risk-weightings for commercial loans