Document Type

Case Study

Case Series

Market Support Programs

JEL Codes

G01, G28


Bankers’ acceptances (BAs) are a form of investment security guaranteed by banks to fund loans to businesses against their credit lines. In Canada, BAs underpin the Canadian Dollar Offered Rate (CDOR), the main benchmark used to calculate floating interest rates in Canada’s derivatives market. In 2018, BAs formed the largest segment of money market securities traded in the secondary market at around CAD 35 billion (USD 26 billion) per week. When asset managers and the country’s public pension providers began shedding BAs amid the COVID-19 pandemic in early 2020, CDOR spiked, and the effects threatened to ripple throughout the Canadian financial system. On March 13, 2020, the Bank of Canada (BoC) established the Bankers’ Acceptance Purchase Facility (BAPF). The BAPF conducted multi-rate reverse auctions with Canadian primary dealers for highly rated BAs of remaining maturities up to 76 days. In its first two operations, dealers sold the BoC the total offered amounts of CAD 15 billion and CAD 20 billion, and the BA market stabilized. The BoC bought another CAD 12 billion of BAs in four operations in April. It continued to offer to buy CAD 10 billion in weekly, then biweekly reverse auctions until October, with no further bids from banks.

Date Revised