OTTAWA – Canada’s banking regulator has kept the domestic stability buffer at the top end of the range to help address heightened financial uncertainty.

As the buffer stands, banks have to hold capital equivalent to 2.5 per cent of total risk-weighted assets.

The Office of the Superintendent of Financial Institutions introduced the buffer in 2018 as an addition to existing requirements for Canada’s largest banks.

OFSI said in its announcement of maintaining the rate that it expects large banks to “exercise vigilance and heightened prudence in their capital management practices with a view to preserving capital.”

The buffer was set at 1.5 per cent of risk weighted assets when introduced but OFSI increased it to 2.25 per cent by late 2019 as concerns about high debt loads rose.

During the early days of the pandemic the regulator dropped the buffer to one per cent so banks had more room to lend, but pushed it up to the current 2.5 per cent in October, 2021.

This report by The Canadian Press was first published June 22, 2022.