In fact, in December, Canada’s Office of the Superintendent of Financial Institutions (OSFI) increased the capital buffer requirement for Canadian banks by 25 basis points, to 1.75 per cent of total risk-weighted 12 3/6  BIS central bankers' speeches  assets.12 Stress tests of the Canadian banks are a useful way to assess how much pressure could be placed on their capital in very tough but plausible scenarios.
Last autumn, we published results from a hypothetical scenario that involved falling house prices. The exercise showed that our banks could handle such a shock.13 We’ll show more of this kind of work in the next Financial System Review, to be published in May. OSFI’s B-20 mortgage underwriting guidelines are also adding to resilience.