This says to me that efforts to increase resilience in the banking system have been worthwhile, because they would help prevent a bad situation from becoming even worse. When assessing the risks, it’s important to look at a range of scenarios.
In the October MPR, for example, we studied the impact of a rise in uncertainty that’s large enough to cause the current global slowdown to become significantly worse, though not nearly as bad as in the IMF stress test.15 Our analysis found that Canada would be hit particularly hard because demand for our exports and commodity prices would both fall.