To help both individuals and businesses in Canada amid the disruption caused by COVID-19, the Bank of Canada has enacted several measures to reduce negative economic impacts and prevent long-term damage to Canada’s productive capacity. First, on March 27 it lowered the overnight rate target to 0.25%, which reduces payments on existing and new loans throughout the economy. It has also implemented an expanded buyback program for different types of bonds, thereby reducing the risk of illiquidity by facilitating the purchase and sale of bonds in the marketplace.

The Bank of Canada also launched the Banker’s Acceptance Purchase Facility (BAPF) — a core funding market and source of financing for small and medium-sized corporate borrowers in Canada. It also established the Provincial Money Market Purchase (PMMP) program to support short-term provincial borrowing. In addition, the Bank of Canada has intervened to help financial institutions obtain funding for lending by taking such steps, among others, as lengthening the term over which it lends money to banks and expanding the list of eligible institutions that can access their lending. Finally, the Bank is working with international policy makers and key economic and financial partners to reinforce well-functioning markets during this time.