The Bank now has two main stress-testing models to help monitor risks to the financial system. These models can also be used to assess the potential impact of policy tools or regulatory actions in mitigating financial system risks.
Assessing risks from elevated household debt The first, the Household Risk Assessment Model, or HRAM, is a microsimulation model that assesses how the debt burden of Canadian households can affect financial stability. Using microdata from household balance sheets, the model allows us to estimate how various shocks would affect the distribution of debt within the household sector.