Although few outside of financial circles have heard of covered bonds, they have emerged as an important and efficient funding channel for Canadian mortgage lending, according to a new report released today from the C.D. Howe Institute. In “How to Make the World Safe for (and from) Covered Bonds,” author Finn Poschmann addresses the fact that covered bond issuance in Canada has a regulatory limit of 4 percent of bank assets, a rate that is lower than in most advanced economies, and explores the case for expanding that limit.
