The Bank of International Settlements, BIS, has recently warned that Canada is facing some pretty elevated risks with regard to its banking system, as a result of its growing debt. The BIS has targeted Canada as the lone developed country where the credit growth is alarmingly high relative to the GDP. Just this month new statistics were released which demonstrated that household debt in Canada continues to grow at a concerning rate.
The Bank of Canada also came out this week and said that Canadians should continue to expect some lower interest rates for some time yet. Despite the BIS previously making the connection in a recent report between low interest rates and problems in the market. A number of financial experts have credited the low interest rates with fueling bubbles in the market. And because we are now down to near negative territory, the BIS has said that the world is rather defenseless against the next major economic crisis; that they'll be ill-equipped to fight it.
Many have alluded to the possible connection between low interest rates and major problems in the market, and the global banking body (BIS) has warned that Canada could face possible trouble in the future should the interest rates move any higher. Yet, it is likely that Canadians could even see them go into negative territory before they see them increase.
For now, the Bank of Canada governor says that he is focused on increasing potential output growth, like the federal government's initial stimulus spending program that seeks to fund many infrastructure projects over the next several years.
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