Federal banking regulator holds domestic stability buffer at 3.5 per cent

Canada’s federal banking regulator says it is keeping its domestic stability buffer unchanged at 3.5 per cent as it judges major vulnerabilities in the banking system remain elevated but are stable.

The buffer is part of the amount of money Canada’s big banks must keep on hand in case of economic shock. It applies to Canada’s six largest, or systemically important, banks.

Peter Routledge, who leads the Office of the Superintendent of Financial Institutions, says the financial landscape shows no need to release more capital.

“Where we are right now is a lot better than we had feared we might be, as an economy and as a financial system,” he said on a conference call with media.

“If conditions deteriorate, if uncertainty rises and creates economic disruptions or financial market disruptions, we are prepared to lower the [domestic stability buffer].”

Lowering the buffer would give banks more room to lend, potentially helping the economy, but Routledge said banks still have notably more capital on hand than needed. 

While banks are currently required to keep an 11.5 per cent buffer overall, they’re currently averaging 13.6 per cent, making for $60 billion in extra capital, he said.

“With strong capital positions, Canada’s [systemically important banks] are not capital constrained and have ample capacity to support households and businesses as economic and financial conditions evolve.”

Routledge said Canadian household debt relative to income remains high but relatively stable and below historical peaks given softer conditions in the housing market.

OSFI said that Canadian corporate debt growth has moderated but credit quality is vulnerable to trade-related headwinds. 

The buffer is reviewed and set every June and December, but can be changed at other times if needed. 

This report by The Canadian Press was first published Dec. 18, 2025.