Yields on short-term government debt fell sharply as investors tried to shift into risk-free assets, and demands for liquidity put upward pressure on overnight interest rates. Most major central banks responded by providing liquidity to support the functioning of markets, conducting operations to reduce the upward pressure on overnight interest rates. The Bank of Canada undertook normal open market buyback operations to provide liquidity.
It also temporarily expanded the list of collateral eligible for use by market participants in these buyback operations to include all securities already eligible for collateral in the Large Value Transfer System. As well, the Bank increased its supply of settlement balances as it normally does when it sees increased demand for cash balances.