In the decade leading up to the pandemic, safe assets did not keep pace with global demand. The supply of high-grade government bonds in advanced economies was constrained because budget deficits were declining. At the same time, the demand for these assets increased due to the aging population,...

We analyze the link between monetary policy and the growth of shadow banks, and by extension, financial stability in Canada. Using monthly financial market data from 1991-2015 in a two-stage time-varying coefficient Bayesian vector autoregression approach, we find that greater shares of shadow...