Document Type

Case Study

Case Series

Broad-Based Emergency Liquidity

JEL Codes

G01, G30


The Bank of Canada (BoC) activated its Contingent Term Repo Facility (CTRF) from April 2020 to April 2021 in response to liquidity strains in markets that stemmed from economic uncertainty and the COVID-19 pandemic. The facility complemented other BoC liquidity facilities by broadening access to the central bank’s repurchase (repo) operations beyond primary dealers and their affiliates, to large asset managers active in Canadian dollar money markets or fixed income markets. The CTRF offered one-month term funding to eligible counterparties on a bilateral basis against securities issued or guaranteed by the government of Canada or a provincial government. In the second quarter of 2020, the BoC lent CAD 291.8 million (USD 223 million) through the CTRF. BoC officials said the facility was “little used” because funding market conditions improved rapidly, and the facility’s pricing and terms meant “regular market sources of funding became more favorable.” Officials from large pension funds, which play a major role in Canadian repo markets, reported that though they accessed the CTRF for lower amounts, it helped restore their confidence by providing backstop repo rates, “[alleviating] some of the need to build up precautionary liquidity.”

Date Revised