Speaking to reporters in Paris on Tuesday, Bank of Canada governor Tiff Macklem said easing capital requirements for Canada’s largest banks is unlikely on its own to spur lending or economic growth, and that businesses must first be willing to invest. (The Logic)

Talking point: Macklem’s comments come days after the Office of the Superintendent of Financial Institutions (OSFI) surprised markets by lowering the domestic stability buffer, a move intended to give banks more flexibility to lend. The debate over OSFI’s capital changes is increasingly shifting from the supply of credit to demand for it. While the regulator’s decision gives greater certainty around future capital requirements, Canadian banks already hold capital well above regulatory minimums, and have struggled to grow commercial lending amid economic uncertainty. The key question is whether Ottawa’s infrastructure and industrial policy agenda will generate enough investment opportunities to make use of that newly available lending capacity.