The Office of the Superintendent of Financial Institutions announced it will hold the domestic stability buffer—the capital cushion Canada’s largest banks must have on hand in case of a downturn—steady at 3.5 per cent of a bank’s risk-weighted assets. (The Logic)

Talking point: OSFI is signalling that it believes Canada’s banks have enough cash to make it through an economic downturn without undue risks to the stability of the financial system , despite the challenges the sector is facing. Canada’s big banks just posted a poor slate of quarterly earnings, cutting jobs and putting money aside to cover potential bad loans as interest rates squeeze consumers and businesses. Bank capital buffers affect the entire economy. Setting them too high means businesses won’t be able to get loans; setting them too low risks bank failures during an economic crisis.