Confidence in Canada’s financial stability has ticked up compared to last year, according to the results of the Canadian Securities Administrators’ third annual systemic risk survey.
Under 60 percent of the survey’s 536 respondents said they were somewhat or very concerned about the Canadian financial system’s stability, reflecting a drop of 6 percentage points compared to the previous year.
Moreover, respondents were significantly less concerned about interest rate levels this year, with only 27 percent considering it a high or very high risk compared to last year’s 68 percent. It was no longer a leading cause of concern for market participants, and according to the CSA, a possible contributing factor was recent and anticipated interest rate declines.
Just 16 percent of respondents reported an uptick in concern levels compared to the previous year, representing a drop of over 20 percentage points.
“It’s encouraging to see the results from our third systemic risk survey, which indicates a positive view of financial stability in the Canadian capital markets,” said Stan Magidson, CSA chair and Alberta Securities Commission chair and CEO, in a statement.
Respondents considered household debt to be the biggest risk to Canadian financial stability, with 68 percent deeming it a high or very high risk; however, this still represented a drop of 7 percentage points compared to last year. According to the survey findings, AI was only a moderate source of concern, with under 25 percent of respondents saying it posed a high or very high risk to the financial system.
The CSA Systemic Risk Committee conducted the 2024 CSA Systemic Risk Survey from October 10 to November 4. The committee sought market participants’ views on financial risks.
Respondents consisted of 536 Canada-based investment dealers and portfolio managers.
The CSA is the council of securities regulators operating throughout Canada’s provinces and territories. It coordinates and syncs regulations across the country’s capital markets.