What U.S. Regulatory Changes Could Mean for Financial Crisis Coordination
This report examines how changes to U.S. financial regulation, particularly those affecting the Federal Reserve, could create new risks for Canadian financial institutions and global financial stability. Staffing reductions, regulatory rollbacks, and political pressure on key government agencies and the Federal Reserve may weaken institutional independence and oversight.
For Canada, these developments could increase regulatory competition, expose institutions to uneven U.S. enforcement, and create greater uncertainty around access to U.S. dollar liquidity during periods of market stress. The report also warns that reduced Federal Reserve independence could undermine international crisis management, including access to U.S. dollar swap lines during financial shocks. These transmission channels could amplify liquidity, market and operational risks for Canadian financial institutions during periods of financial stress. Canadian financial institutions should consider strengthening liquidity planning, stress testing and contingency strategies to address rising uncertainty and potential tail-risk events.