On April 26, 2012 the Canadian government introduced legislation
which provides a framework for the issuance of covered bonds by
Canadian financial institutions. The framework is intended to make
the market for Canadian covered bonds more robust and increase
financial stability by helping lenders find new sources of funding.
It implements the measures introduced by the federal government in
its budget on March 29, 2012 and follows through on the
government's 2010 commitment to introduce covered bond
legislation and a public consultation on covered bonds undertaken
by the government last year. Covered bonds are debt obligations
issued by financial institutions which, in the Canadian context,
are secured by a cover pool of insured and uninsured mortgage loans
and other substitute assets held in a special purpose vehicle
thereby isolating the collateral from the assets of the financial
institution issuer to ensure they are available for covered bond
holders in the event of
