The Office of the Superintendent of Financial Institutions lowered the domestic stability buffer—which sets how much extra capital banks hold to guard against economic shocks—to three per cent from 3.5 per cent, the first change since June 2023. It also lowered the buffer’s range to zero to three per cent from zero to four per cent. (The Logic)

Talking point: The move follows superintendent Peter Routledge’s recent comments that banks should lend more to support the economy. The cut lifts the capital banks hold above the top end of OSFI’s requirements to $74 billion from $45 billion, Routledge told The Logic. He said the decision was not intended to force banks to lend more, but to remove capital rules as a possible source of “unproductive risk aversion.” Still, Routledge said banks occupy “positions of immense privilege” and should keep in mind the needs of households and businesses. OSFI last lowered the buffer in the early days of the pandemic, but Routledge said the current situation is very different and that OSFI still views the Canadian economy as resilient.