Another promising avenue addresses the regulation of margins to mitigate the problems associated with procyclicality. Adopting minimal, or countercyclical, margins could help to curb excessive leveraging during periods of exuberance and lessen the extent of a disruptive curtailment of leveraging during difficult periods. Moreover, increased use of central counterparties for repos could facilitate the implementation of this type of regulation.
Conclusion It was my intention today to talk about risks, but even more to shed some light on the significant strides taken in Canada to improve the resilience of our financial system. One tangible, and local, example of this progress has been the creation, right here in Montréal, of a central counterparty for repo transactions.