Because of the liquidity trap, the Bank of Canada's creation of billions of dollars in excess reserves during the great recession had little or no effect on lending by the chartered banks.

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The liquidity trap occurs when interest rates are already very low and injecting more money into the economy has little impact on borrowing and spending behavior. Therefore, the Bank of Canada's creation of excess reserves during the great recession had little or no effect on lending by the chartered banks.

Because of the Liquidity Trap, the Bank of Canada's Creation