Bank of Canada Senior Deputy Governor Carolyn Wilkins said on Thursday that tighter mortgage rules appear to be having the "desired effect" of improving debt quality, but the central bank is watching to see what impact its three recent interest rate hikes will have on households.

The global economy is expanding, but Wilkins said high consumer debt and the risk of a cyber attack still keep her up at night.

"Things seem to be going in the right direction, combined with the fact that the global economy seems to be in a very synchronized expansion. But at the same time that vulnerability is still there and would be a factor if the Canadian economy were to be hit with an adverse shock," Wilkins said following a speech at the University of Toronto.

With household debt levels near record highs and the economy near capacity, the central bank has pledged caution as it tries to normalize rates after they were slashed in the wake of the financial crisis and oil shock.

It has raised rates three times since last July and analysts expect only one or two more increases this year, as a slowing housing market and the burden of higher borrowing costs risk destabilizing highly leveraged households.

In her speech to the Rotman School of Management, Wilkins said interest rate decisions to achieve the bank's inflation target and support financial stability are currently complementary given high consumer debt and an economy operating near capacity.

But there is nevertheless a fine balance to be struck, she said, noting that moving too slowly would allow more time for financial vulnerabilities to build, while moving too quickly could have outsized effects given the high debt level.

"There may be, in different situations, a case for taking longer to bring inflation back to target than the usual six to eight quarters," she added.

Wilkins also warned of the threat of a cyber attack and risk of rapid financial innovation.

"The crypto world is moving fast, and is largely unchecked. This certainly raises concerns about investor protection, market integrity and the use of crypto assets in illegal activities," Wilkins said.

Noting that low rates encourage people not only to borrow more but to make riskier investments, Wilkins said price stability alone was not enough to ensure financial stability and could contribute to the buildup of vulnerabilities.