BOC’s Gravelle: The risk of a wave of consumer defaults seems low

The Bank of Canada (BOC) Deputy Governor Toni Gravelle downplayed the risks of a consumer default wave, in remarks via video conference to the Autorite des marches financiers, adding that the impact of the coronavirus pandemic has not yet materialized.

Further comments (via Bloomberg)

“We have long warned that a recession could create broad stress across the financial system.”

“Yet, despite the devastating economic impact of the pandemic, this risk has not -- as of yet -- materialized.”

“To this point, we do not see signs that home prices are rising due to speculation like we saw in the greater Toronto and Vancouver areas a few years ago.”

Cautioned about “the need to be vigilant in certain segments of the market such as condos.”

“Staff will be conducting simulations using firm-level data to quantify this, and we plan to publish those results in the next couple of months.”