Bank of Canada: shadow banking could contribute to imbalances

Wed Jun 26, 2013 1:03pm EDT
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TORONTO, June 26 (Reuters) - The rapid increase in the securitization of government-backed mortgages is a concern in Canada's shadow banking sector and could potentially exacerbate the problem of high household debt, a Bank of Canada official said on Wednesday.

"A key concern is the potential misallocation of resources away from non-mortgage lending toward mortgage credit - which, in the current economic environment, contributes to the buildup of imbalances in the household sector," said Bank of Canada Deputy Governor Timothy Lane in a speech he was delivering in Toronto.

Lane provided no guidance on Canadian monetary policy in the prepared text of his remarks.