How Canada’s Financial System Handled the Toughest Days of Market Volatility

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By Richard Anton

August 2020

The Bank of Canada (BoC) response to COVID-19 – applying the lessons learned from the 2008 financial downturn – was fast and comprehensive. The BoC provided several rate cuts and also launched a series of large-scale asset purchase programs. The result of the support – alongside the extensive measures in the wider economy enacted by the Canadian government – was that Canada’s financial system remained stable and continued to function.

When the pandemic struck, a flight to safety saw big spikes in flow to cash and away from equities. Ultimately, clients were confident in the strength and resilience of Canada’s economy, meaning that across the board – both government bonds and other securities – we saw high flows. This was also an expression of confidence in the Canadian financial system, in part due to how we had handled the global financial downturn of 2008.

The market correction that followed from COVID-19 saw tremendous volatility and extremely high volumes of investment operations during the peak period in March. To bring it into context, this was at a time of flux as financial institutions were adapting and expanding remote work environments and resiliency models while also handling an unusually high spike in volume.

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CIBC Mellon is a Canadian company exclusively focused on the investment servicing needs of Canadian institutional investors and international institutional investors into Canada. Founded in 1996, CIBC Mellon is 50-50 jointly owned by The Bank of New York Mellon (BNY Mellon) and Canadian Imperial Bank of Commerce (CIBC). CIBC Mellon's investment servicing solutions for institutions and corporations are provided in close collaboration with our parent companies, and include custody, multicurrency accounting, fund administration, recordkeeping, pension services, exchange-traded fund services, securities lending services, foreign exchange processing and settlement, and treasury services.

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