Summary Recently, Canada's OSFI unveiled new liquidity adequacy requirements set for 2026, a decision that starkly contrasts with the prevailing market expectation of "interest rate cuts and easing." Using this as a starting point, and incorporating multiple factors such as the latest rate hike by the Reserve Bank of Australia and the subprime auto loan crisis that erupted in late 2025, this article provides an in-depth analysis of several challenges facing global liquidity in 2026.
Policy easing expectations falling short, leading to market volatility driven by behavioral liquidity gaps.
Sustained pressure on non-traditional financial instruments and the private credit sector.
Macroeconomic factors further generating and accumulating market pressures.
Turbulence stemming from the fluctuating process of de-dollarization and the absence of a global currency alternative.
The divergence in monetary policy and regulatory stances among major economies indicates that central banks and regulators are adopting a more cautious approach to potential economic uncertainties. The anticipation for further policy easing may be disappointed. Furthermore, although interest rate policies in many countries have already been adjusted or entered a plateau phase, the quantitative dimension of liquidity contraction is just entering deep waters. The regulatory redefinition of 'stable funding' essentially initiates an 'atypical rate hike' within the balance sheets of financial institutions. The dominant force for 2026 liquidity may shift more towards structural liquidity buffer measures at the market level. This article will analyze, based on OSFI's 2026 policy changes, the potential liquidity risk points that international markets may need to monitor under this macroeconomic outlook. The repeated mention of "increased uncertainty in economic forecasts" during various central bank policy meetings reveals multiple concerns held by central banks and regulators regarding the current fragile prosperity in markets. Considering factors such as the potential vulnerability from elevated stock market valuations; the lack of clear directional guidance from divergent economic data; the uncertainty surrounding monetary policy due to the upcoming change in the U.S. Federal Reserve Chair; and the potential impact on market liquidity from the Bank of Japan's possible interest rate decisions, the possibility of significant further declines in interest rates or a substantial easing of financing conditions is limited. Therefore, simulating panic selling by investors under stress scenarios and the resulting liquidity issues holds urgent practical significance. In the new regulations, OSFI has provided a more detailed classification of deposits and funding products, aiming to reflect the true behavior of funds under stress, making the assumed outflow rates closer to their actual stability. Adjusting model assumptions to reflect the true flow of funds under stressed conditions is crucial for targeting potential risks, maintaining financial system stability, and ensuring orderly market functioning. Liquidity risk never exists in isolation. Factors such as the credit environment and market risk both act upon liquidity and are, in turn, influenced by it. Stress emerging in localized areas can spill over into broader markets. Certain credit instruments and structured products in the current market contain hidden exposures to liquidity crises. This sector was already under significant pressure due to the dual forces of rising interest rates and a weakening economic environment. For instance, the bankruptcy of a subprime auto lender in September 2025 directly triggered widespread concerns about the health of the multi-billion dollar auto credit market. The auto asset-backed securities (ABS) issued by the involved institution were deeply embedded in the U.S. credit market, with complex funding structures and risk linkages to several major institutions. This event prompted regulators to reassess the high-risk lending models and exposures in this sector. During market turbulence, structured products that were originally considered stable funding can trigger large-scale redemptions due to activation events (defaults, liquidations, etc.), leading to hedging failures. OSFI's new regulations provide more detailed explanations and clarifications for the treatment of such structured products and other novel credit instruments, ensuring these complex products are adequately incorporated into the calculation of short-term liquidity metrics based on their characteristics, allowing for more appropriate risk weighting. Investors should pay close attention to the risk premiums of these product categories. As these assets face higher liquidity and potentially capital requirements, the secondary market trading prices of already-issued products may face downward pressure. Simultaneously, financial institutions issuing new similar products might lower interest rates to cover the higher liquidity costs. We are currently at a critical juncture characterized by profound technological transformation, geopolitical realignment, a shift from global trade interconnectedness towards regionalization, and a reshuffling and restructuring of the energy industry. The outcomes of changes at each level will have profound impacts on economies worldwide. The new technological revolution driven by AI and automation is already deeply embedded across all layers of the economy, impacting various industries to different degrees, either causing disruption or generating strong supply and demand. This has also resulted in contradictory and even polarized economic data trends: liquidity demands have significantly diverged between industries, greatly increasing future economic uncertainty. The post-Cold War global order centered around the United States is being reconfigured. Sino-U.S. strategic competition dominates the direction of global trade, technology, and security policies. Meanwhile, Europe's influence is declining due to its economic woes, while middle powers (such as those in South Asia, the Gulf, and Southeast Asia) are gaining influence, benefiting from supply chain restructuring and regionalization. Regional conflicts during this new order-building process could severely impact economies. The era of symbiotic growth through global free trade has ended, and structural growth rates are set to slow. Capital flows are no longer solely determined by returns; the driving effect of geopolitical factors is more pronounced. Existing financing channels, especially the transmission of cross-border liquidity, may be affected, thereby pressuring financial institutions operating across borders or entities long reliant on international funding channels. Once the realignment is complete, deeper integration within regional blocs is expected to create new synergies across multiple fields. Influenced by the international competitive landscape shaped by geopolitics, global supply chain efficiency has declined; coupled with the direct impact of weaponized tariffs on prices, which in turn pressures already fragile supply chains, makes controlling inflation and achieving economic targets highly unpredictable. However, the existing ecosystem also demonstrates strong resilience, achieving a degree of supply stability and buying time for the establishment of a new order. It is precisely due to the uncertainty arising from the interplay of these multiple factors that OSFI's new regulations emphasize the necessity of supervisory judgment under multiple macro-stress scenarios, allowing regulators discretionary power for immediate assessment and intervention. In current global trade, while the U.S. dollar remains dominant, its structural changes are irreversible: the dollar's uniqueness is gradually eroding, with multiple alternative options emerging. According to IMF data, the U.S. dollar's share of global foreign exchange reserves has continued to decline, dropping from approximately 70% in 2000 to about 57% in 2025, its lowest level since the mid-1990s. Simultaneously, gold has experienced structural, systematic accumulation: since 2022, driven by the U.S. and EU freezing Russian foreign reserves, the market has gained a clearer understanding of the "political conditionality of dollar assets," leading gold to absorb the resulting loss of trust in the dollar. Similarly, sanctions against Russia spurred the creation of a dual-currency system for energy, raw material, and logistics trade. China's CIPS and Russia's SPFS are being used as partial alternatives to SWIFT, practically eliminating the use of the dollar for settlement in these operations. BRICS nations, as systemically important commodity exporters, have established alternative payment channels at the infrastructure level to build a payment system resilient to sanctions. The dollar's exclusivity in crude oil trade has also loosened, which partly catalyzed U.S. military action against Venezuela. Currently, there is no single successor in the world monetary system capable of replacing the dollar outright. However, it is highly feasible for a multi-currency structure to collectively assume various functions of the dollar. A multi-currency reserve system, complemented by gold as a politically neutral reserve asset, with regional spheres utilizing other currencies (like the Renminbi) for some settlement functions, and a gradually developing central bank digital currency system, will form a new multipolar system. Trust in the dollar is transitioning from being the sole, default option to being one option among others, contingent on conditions. This transition process will inevitably be accompanied by friction and turbulence: threats to the dollar's status could trigger instability; precious metals acting as partial substitutes may experience potential price volatility; the Renminbi, as one alternative, faces limitations due to capital controls and transparency issues; and the technical constraints and security challenges of digital currencies could all impact market liquidity. The loosening of the dollar's dominance essentially involves restructuring the liquidity clearing paths for global cross-border trade. A partial vacuum left by the dollar could lengthen or complicate cross-border settlement paths. When calculating the Liquidity Coverage Ratio (LCR), financial institutions will likely have to allocate a higher risk buffer for "funds in settlement," directly compressing the liquidity available for market activities. 2026 is unlikely to be the 'unilateral easing year' the market anticipates. OSFI's proactive measures and the cautious stance of various central banks remind us that liquidity management is shifting from being 'policy-driven' to 'structure-dependent,' moving from 'merely viewing quantity' to 'deeply assessing quality.' Against the backdrop of interacting multiple market uncertainties, the resilience of financial institutions will no longer depend solely on their asset size, but on their ability to capture 'sticky funding' under extreme stress scenarios. For investors, understanding the underlying nature of liquidity at this level may be the key to navigating the next potential 'turbulence'.
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