Canada’s financial system shows strength despite rising vulnerabilities from geopolitical tensions and AI-driven disruptions, the central bank said.
The Bank of Canada said risks to financial stability remain elevated but the system has demonstrated resilience amid global challenges. Large banks have improved their financial health over the past year, though vulnerabilities persist in certain sectors.
The report highlighted threats from the Middle East conflict, U.S. trade policy shifts, and potential AI disruptions to business models. A combination of shocks could trigger investor panic, liquidity strains, or rapid asset sell-offs, the bank warned.
Mortgage renewal risks tied to payment shocks are expected to ease by the second half of 2027, while cyber threats from AI advancements may escalate in speed and sophistication.