The Big-6 banks were up small after OSFI lowered the domestic stability buffer to 3%, which translates to a new CET 1 requirement of 11% - implying a capital cushion of more than $70B…

… or ~$670B of risk-weighted assets. That could stimulate lending activity…

… at a time when growth in household credit is outpacing income. Should economic conditions improve, deploying excess capital could make for a smoother recovery…

… but if conditions worsen, any leverage added to the system could magnify the problem. I’m banking on the former, but let’s see what happens.

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