OSFI holds Domestic Stability Buffer at 3.5%, reflecting resilience in a changing risk environment

OTTAWA, ON, Dec. 18, 2025 /CNW/ - Today, the Office of the Superintendent of Financial Institutions (OSFI) announced that the Domestic Stability Buffer (DSB) will remain at 3.5% of total risk-weighted assets. OSFI first announced this level in June 2023.

Canada's six largest banks continue to maintain resilient capital levels, with Common Equity Tier 1 (CET1) ratios well above the supervisory expectation of 11.5%, at an average of 13.6% across the sector. This sizable capital cushion equates to roughly $60 billion.

Big Banks Capital CET1 Requirements (CNW Group/Office of the Superintendent of Financial Institutions)

In OSFI's judgment, the major vulnerabilities in the banking system remain elevated but stable. Canadian household debt, relative to income, remains high but relatively stable and below historical peaks given softer conditions in the housing market. Canadian corporate debt growth has moderated but credit quality is vulnerable to trade-related headwinds. Low credit spreads and high earnings multiples remain a feature of capital markets in Canada and abroad. Meanwhile, global uncertainty, including geopolitical risks, continues to shape the overall risk environment.

OSFI has held the DSB steady because its level is proportionate to these vulnerabilities. Moreover, since systemic vulnerabilities are stable, and in some cases below past highs, OSFI does not expect to increase the DSB from its current level. OSFI also judges that the DSB range of 0% to 4% is consistent with low probability, high severity stress scenarios.

Were vulnerabilities to materialize into significant costs to the financial system, OSFI would lower the DSB. OSFI would see such an adjustment as a routine response to changes in the risk environment.

More information about OSFI's decision can be found in the Decision Summary Note.  

Quote 

"OSFI uses the DSB tool to ensure Canada's six systemically important banks hold capital that is appropriate for the level of risk in the financial system. This underpins the resilience of Canada's financial sector. Today, Canada's six largest banks hold capital levels well above supervisory expectations. This enables them to provide core banking services to the Canadian economy throughout the business cycle." 

-       Peter Routledge, Superintendent of Financial Institutions  

Quick facts  

• The DSB applies to Canada's six biggest banks, known as Domestic Systemically Important Banks (D-SIBs).
• OSFI expects D-SIBs to maintain a total Common Equity Tier 1 (CET1) ratio to at least 11.5% of risk-weighted assets, all currently exceed 13% with an average of 13.6%.   
• OSFI reviews and sets the DSB level twice a year, in June and December, and can adjust it at any time if conditions warrant.  
• Decisions are based on a wide range of indicators, stress-testing results, and supervisory judgment.

Related links  

• Domestic Stability Buffer Homepage
• Opening Remarks by Superintendent Peter Routledge  
• Domestic Stability Buffer – Decision Summary Note
• Industry Letter
• Domestic Stability Buffer design framework 

SOURCE Office of the Superintendent of Financial Institutions

OSFI - Media Relations, Email: [email protected], Telephone: [phone]