The central bank’s annual review of the country’s network of lenders and non-bank financial institutions turned up little reason to worry about a serious financial crisis, although officials flagged higher debt-servicing costs and pricey asset valuations as vulnerabilities worth watching. (The Logic)

Talking point: The newly renamed Financial Stability Report found that higher incomes have helped offset borrowing costs, while households also have increased deposits and reduced discretionary spending—making the risk of mass defaults low. The central bank also said a spike in business insolvencies probably is catch-up from the COVID-19 pandemic, when bankruptcies dropped to an unusually low level, rather than a reason for deep concern. A calm surface doesn’t mean there isn’t trouble underneath. The report noted that half of all existing mortgages haven’t yet reset at higher rates, renters are having a harder time than homeowners, and “stretched” asset prices represent a heightened risk of a nasty correction.