CANADA'S BANKING SYSTEM
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YOY = Year-over-year | Interest rates
TOTAL CREDIT | CANADA
OUTSTANDING, YOY %
Data: Statistics Canada
WHAT IS BANK CREDIT AND WHY IS IT IMPORTANT?
In simple terms, "bank credit" is Canadian dollars owed by individuals and businesses to banks licensed in Canada. The reason we track bank credit is because it's a measure of more than 95% of the total purchasing power (deposits) circulating in the economy. Unlike non-bank lenders, when banks lend (extend credit) they create new money (deposits). When banks lend they create an asset (the loan contract) and dollar deposits (an accounts payable liability) for themselves. These new deposits are then spent into the economy by the borrower. When the total outstanding balance of bank credit increases, the total amount of deposits within the economy also increases.
Banks emit deposits and this has very powerful consequences for the economy.
For instance,
a 10% increase in total credit balances is associated with as much as a 9% increase in inflation (CPI).
TOTAL CREDIT | CAN
OUTSTANDING, IN MILLIONS CAD ($)
Data: Statistics Canada
TOTAL CREDIT | CAN
ISSUED, IN MILLIONS CAD ($)
Data: Calc. using data from Bank of Canada
TOTAL CREDIT | CAN
PAID, IN MILLIONS CAD ($)
Data: Calc. using data from Bank of Canada
LENDING AFTER BANK OF CANADA HIKED RATES
MAJOR CREDIT | CAN
OUTSTANDING, IN MILLIONS CAD ($)
Data: Calc. using data from Bank of Canada
WHAT'S HAPPENING WITH VARIABLE RATE MORTGAGES
BANK CREDIT OUTSTANDING PER WORKER
TOTAL CREDIT PER WORKER | CAN
OUTSTANDING, IN THOUSANDS CAD ($)
Data: Calc. using data from Statistics Canada
BUSINESS CREDIT PER WORKER | CAN
OUTSTANDING, IN THOUSANDS CAD ($)
Data: Calc. using data from Statistics Canada
CONSUMER CREDIT PER WORKER | CAN
OUTSTANDING, IN THOUSANDS CAD ($)
Data: Calc. using data from Statistics Canada
MORTGAGE CREDIT PER WORKER | CAN
OUTSTANDING, IN THOUSANDS CAD ($)
Data: Calc. using data from Statistics Canada
HERE'S HOW MUCH MONEY CANADIAN BANKS NEED TO LEND TO MOVE ECONOMIC OUTPUT BY $1
BANK CREDIT-TO-GDP RATIO | CANADA
ALL INDUSTRIES AND CANADIAN DOLLAR BANK LOANS
Data: Calc. using data from Statistics Canada
WHY DOES IT TAKE SO MUCH BANK CREDIT?
Canada's banking system is increasingly lending for unproductive purposes. As a result, it now takes almost $1.5 of outstanding bank credit to move economic output (GDP) by $1.
This is due to a combination of federal and provincial banking regulations and policies in place at various levels of government and within bank lending departments. A large amount of bank loans are issued for things that are not recorded in GDP statistics (such as existing home purchases, used car purchases, etc.) and do not produce a value added. This type of lending behavior is now posing a threat to economic sustainability in Canada; it pushes up asset prices (housing, transportation, food, etc.) but does not produce value or add productivity to the economy. This could result in a banking crisis and a sharp economic contraction with rising unemployment.
BANK CREDIT-TO-GDP RATIO | CANADA
ALL INDUSTRIES AND CANADIAN DOLLAR BANK LOANS, YOY %
Data: Calc. using data from Statistics Canada
BANK CREDIT VOLUME-TO-GDP RATIO | CANADA
ALL INDUSTRIES AND CANADIAN DOLLAR BANK LOANS
Data: Calc. using data from Statistics Canada
BANK CREDIT VOLUME-TO-GDP RATIO | CANADA
ALL INDUSTRIES AND CANADIAN DOLLAR BANK LOANS, YOY %
Data: Calc. using data from Statistics Canada
BY SHARE
OUTSTANDING, IN MILIONS CAD ($)
Data: Bank of Canada
BY SHARE
ISSUED, IN MILLIONS CAD ($)
Data: Bank of Canada
BY SHARE
PAID, IN MILIONS CAD ($)
Data: Calculated using data from Bank of Canada
MONEY
BANK DEPOSITS
IN MILLIONS CAD ($)
Data: Statistics Canada
NOTES AND COINS
IN MILLIONS CAD ($)
Data: Statistics Canada
WHERE THESE BANK DEPOSITS AND CURRENCY COME FROM
MONEY CREATION
BANK CREDIT
OUTSTANDING, IN MILLIONS CAD ($)
Data: Calculated using data from Bank of Canada
FISCAL MONEY CREA., IN MILLIONS CAD ($)
Data: Calculated using data from Bank of Canada
