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The Bank of Canada (BoC) Deputy Governor Lawrence Schembri said in a speech on Friday that central banks could contribute to the financial stability.
"So although central banks don't themselves have a broad set of instruments to mitigate financial vulnerabilities, they do have that system-wide view, which they can and do use to promote financial stability by making public their analyses of financial vulnerabilities and risks and making recommendations for preventive policy actions," he said.
"At the same time that central banks are enhancing their efforts to promote financial stability, they must maintain their focus on monetary policy to achieve price and macroeconomic stability. These are necessary conditions for financial stability," Schembri added.
The BoC deputy governor noted that the central bank would introduce a framework for stress tests that would incorporate different sectors of the financial system.
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