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Canada: Mortgage Bond Purchase Program

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Abstract

Given the negative financial and economic shocks of the COVID-19 pandemic, the Bank of Canada (BoC) adopted several policies, including a suite of monetary policies, to maintain a healthy level of market liquidity. Among these measures, the BoC established the Canada Mortgage Bond Purchase Program (CMBP) on March 16, 2020. Through the CMBP, the BoC purchased Canada Mortgage Bonds (CMBs) from primary dealers on the secondary market, holding the CMBs on its balance sheet. The bank created the CMBP, which operated twice weekly and targeted purchases of up to CAD 500 million (USD 373 million) per week, to "support the functioning of the CMB market and the ability of financial institutions to finance mortgage lending to Canadian homeowners." While the BoC credited the CMBP for maintaining Canadian market liquidity, use of the CMBP declined as the Canadian economy improved. Because of its disuse, on October 15, 2020, the BoC announced the CMBP would cease its operations on October 26, 2020. The CMBP ceased operations as scheduled. In about six months of operation, purchases through the CMBP totaled more than CAD 8 billion.

Suggested Citation

  • Vergara, Ezekiel, 2022. "Canada: Mortgage Bond Purchase Program," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 4(2), pages 1519-1533, April.
    • Handle: RePEc:ysm:ypfsfc:v:4:y:2022:i:2:p:1519-1533
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    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1359&context=journal-of-financial-crises
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    Cited by:

    1. Sana Bashir & Tapan Sarker & Mirza Nouman Ali Talib & Umair Akram, 2023. "Financing Options for Green and Affordable Housing (GAH): An Exploratory Study of South Asian Economies," Sustainability, MDPI, vol. 15(15), pages 1-20, July.
    2. Metrick, Andrew, 2022. "Market Support Programs: COVID-19 Crisis," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 4(2), pages 179-219, April.

    More about this item

    Keywords

    Asset purchases; Canada Mortgage Bond Purchase Program (CMBP); Canada Mortgage Bonds (CMBs); market liquidity;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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