8 In addition to assessing risks, MFRAF can be used to examine the merits of policy or regulatory initiatives such as capital and liquidity rules. As the model becomes more refined, the objective is to use it more to complement other existing macro stress-testing exercises and to sharpen our analysis and communication of risks in the Bank’s Financial System Review. Conclusion Let me conclude.
The Bank of Canada is conducting extensive research into finding methodologies and tools to identify and measure systemic risk. While work in this area is extremely complex, the Bank has made substantial progress in recent years. We now have two state-of-the art models.