MNI BRIEF: Canada Raises Bank Capital Buffer On Housing Risk

Canada's federal banking regulator increased the "domestic stability buffer" of risk-weighted assets to 3.5% from 3% on Tuesday, citing "high household and corporate debt levels, the rising cost of debt, and increased global uncertainty around fiscal and monetary policy."

Households and companies are “more vulnerable to economic shocks” amid rising interest rates and high debt levels, Superintendent Peter Routledge said Tuesday, adding now is a good time to build in resilience to any downturn.

The buffer was already raised in December to and the upper limit was also increased to 4% from 2.5%. Scheduled decisions are made in June and December. The move applies to Canada's six largest banks and takes effect Nov. 1. (See: MNI INTERVIEW:Busted Canada Debt Goal Means Pain Later-Ex Aide)