Research Briefing | Mar 16, 2023

Financial crisis averted so far but Canada on alert for contagion

US authorities appear to have contained the fallout from the collapse of two regional banks – Silicon Valley Bank (SVB) and Silvergate Capital. We think the failures are isolated events and do not pose a systemic threat to financial stability for the US and global economies.

What you will learn:

  • However, the bank failures have exposed cracks in the global banking system, so uncertainty and risk will persist. Canadian financial regulators are now watching for signs of contagion that could compound the risk of a financial crisis from Canada’s deepening housing downturn and high household debt.
  • For now, we have not altered our baseline forecast for Canada, but the balance of risks has shifted to the downside.
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