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Behaviour in the Canadian large-value payment system: COVID-19 vs. the global financial crisis

Author

Listed:
  • Alexander Chaudhry
  • Anneke Kosse
  • Karen Sondergard

Abstract

The Large Value Transfer System (LVTS) is Canada’s electronic funds transfer system for large-value and time-critical payments. It forms the backbone of the Canadian financial system. If the payments in the LVTS were to come to a halt, this would have a systemic impact on overall economic activity and affect the stability of the Canadian financial system. In this note we discuss the role that the LVTS has played during the onset of the Covid-19 pandemic and we evaluate the stress experienced in the system in 2020. In particular, we examine the number and value of rejected and delayed payments, the proportion of Tranche 2 transactions and intraday bilateral credit limit adjustments. We show that lessons learned from the 2008–09 global financial crisis in terms of the timing and effectiveness of specific Bank of Canada policy measures have helped avoid potential liquidity stresses in the LVTS in 2020.

Suggested Citation

  • Alexander Chaudhry & Anneke Kosse & Karen Sondergard, 2021. "Behaviour in the Canadian large-value payment system: COVID-19 vs. the global financial crisis," Staff Analytical Notes 2021-7, Bank of Canada.
    • Handle: RePEc:bca:bocsan:21-7
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    Cited by:

    1. Ajit Desai & Jacob Sharples & Anneke Kosse, 2024. "Finding a needle in a haystack: a machine learning framework for anomaly detection in payment systems," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Granular data: new horizons and challenges, volume 61, Bank for International Settlements.

    More about this item

    Keywords

    Coronavirus disease (COVID-19); Financial institutions; Financial stability; Payment clearing and settlement systems;
    All these keywords.

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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