EMF ECBC Welcomes Canada’s OSFI Consultation on Updated Liquidity Adequacy Requirements Guideline
The European Mortgage Federation – European Covered Bond Council (EMF-ECBC) welcomes the announcement by Canada’s Office of the Superintendent of Financial Institutions (OSFI) launching a public consultation on the draft Liquidity Adequacy Requirements (LAR) Guideline (2027). The consultation, open until 20 July 2026, represents an important step in ensuring that Canada’s prudential framework continues to evolve in line with market developments and global regulatory standards.
Supporting a Risk-Based and Proportionate Approach
The EMF-ECBC strongly supports OSFI’s objective of maintaining risk-based, proportionate and clear liquidity requirements for financial institutions. The proposed updates aim to enhance consistency and transparency while ensuring that liquidity frameworks remain aligned with the underlying risks faced by institutions. Robust liquidity regulation is essential to safeguarding financial stability and the EMF-ECBC recognises the importance of ensuring that institutions can meet their obligations even under stressed conditions.
Recognition of Covered Bonds as High-Quality Liquid Assets
The EMF-ECBC particularly welcomes OSFI’s proposal to introduce a new Level 1B category of High-Quality Liquid Assets (HQLA), including highly rated covered bonds, with a 7% haircut. This represents a significant acknowledgement of the strong credit quality, liquidity characteristics and resilience of covered bonds, which play a vital role in funding mortgage lending and supporting the real economy. By better reflecting the market liquidity of such instruments, the revised framework can contribute to a more accurate and efficient calibration of liquidity requirements.
Promoting Financial Stability and Market Functioning
The EMF-ECBC notes that the proposed revisions seek to strengthen financial system resilience while avoiding unnecessary constraints on lending and market activity. A well-calibrated liquidity framework supports both prudential objectives and the continued capacity of financial institutions to finance households and businesses. In this regard, the EMF-ECBC welcomes OSFI’s balanced approach, which takes into account regulatory burden, competitiveness and the smooth functioning of financial markets.
Commenting on this development, EMF-ECBC Secretary General, Luca Bertalot said:
“We warmly welcome OSFI’s consultation on the updated Liquidity Adequacy Requirements Guideline. This initiative reflects a strong commitment to maintaining a forward-looking, risk-based regulatory framework that supports both financial stability and market efficiency. In particular, the proposed recognition of highly rated covered bonds within a new Level 1B HQLA category is a very positive step, acknowledging their proven liquidity, resilience and credit strength. Covered bonds are a cornerstone of sustainable and affordable housing finance around the world, and their appropriate treatment in liquidity frameworks is essential to ensure continued support for lending to the real economy. With this proposal, our Canadian friends have opened the door to a wider debate on reciprocity at a global level and we look forward to engaging constructively with OSFI and others in this area.”
Commitment to Engagement
The EMF-ECBC encourages its members and stakeholders to actively participate in the consultation process and contribute their expertise. Furthermore, the EMF-ECBC looks forward to engaging constructively with OSFI to support the finalisation of the LAR Guideline, expected in February 2027, with implementation anticipated on 1 May 2027.
Contact:
Luca Bertalot
Secretary General
Tel: +32 2 285 40 35