BoC Deputy Governor Gravelle says Canadian financial institutions should not worry about using standard liquidity facility for overnight liquidity

Standing-lending-facility stigma is a recurring problem for central banks operating corridor or hybrid frameworks: facilities designed as routine backstops go unused because borrowing is read by peers as a distress signal, which pushes institutions to hoard reserves instead and blunts the ceiling the facility is supposed to impose on overnight rates. Officials confronting this pattern have historically resorted to exactly this kind of public encouragement, framing the facility as ordinary plumbing and urging members of the payment system to draw rather than over-accumulate balances. The mechanism at stake is the spread between overnight rates and the facility rate: successful de-stigmatisation tightens the ceiling and reduces rate volatility around quarter-ends and settlement squeezes, while failure leaves the official corridor wider in practice than on paper. Remarks alone have rarely sufficed on past occasions; where stigma has persisted, central banks have followed with technical adjustments such as narrowing the spread to the target rate, renaming or redesigning the facility, or publishing anonymised usage data. The tells are subsequent uptake in facility draws, any narrowing of the facility spread, and whether overnight rates continue printing toward the top of the band. As guidance rather than an operational change, the direct rate implication is minimal.