Talk:Bank of Canada

Untitled

Shaun courtice (talk) 00:04, 16 January 2011 (UTC) Hello, I'm very new to Wikipedia and have just created an account and started editing articles. Before doing so I read the various guidelines and policies carefully, however.

At the top of this article is a message "This article needs additional citations for verification." It seems to me that this article has more citations than many similar articles. Is this message from one of the Wikipedia "bots"? Or am I still "unclear on the concept"? :)

Thank you very much.

Bank of Canada

The last sentence is: " In the early 1990s the fractional banking rules of Canada were changed so the Bank of Canada could no longer dictate the amount of fiat currency reserves that Canadian chartered banks must own." This historical fact is of more than incidental interest. Please provide citation. Also, the sentence suggests ideology. My suggestion "In the early 1990s the Bank of Canada eliminated Canadian chartered banks reserve requirements. Instead the Bank's rules on interbank payments settlement and settlement costs motivates chartered banks to avoid inflation. Also the Bank of Canada uses its power to execute government transactions to move government deposits in or out of chartered banks, thus modifying their balance sheets. The Bank of Canada's operations require an accurate six to eight month model forecast by which short-term interest rate setting is guided. Many other nations also have no reserve requirements. But in the U.S.A., banks are more independent of the Federal Reserve, so it claims reserve policies are more useful there." [1]

Regulation

• From Peter Johnson [04:37, 24 November 2005 (UTC)]: "For many years [...] was little government regulation of the nation's money supply." I added the word "government" because it is my opinion that the free market does in fact regulate—and marvellously so—so to imply that only "government regulation" is regulation as such would be POV.

It depends on your definition of "free market". If like Adam Smith, a "free market" is a market free from unearned income, not government regulation (law), then Mr. Johnson's statement makes no sense. 24.36.78.185 (talk) 01:28, 7 October 2010 (UTC)

Assessment

I have assessed this as a Start Class, as it is thorough, but has far too few references for it content and importance. If proper references were added, it would probably be a B Class article. I have rated it as high importance, because I feel that it is of vital importance to understanding Canada and that most readers would have some understanding of it. Cheers, CP 23:52, 27 August 2007 (UTC)

Inflation (POV)

The whole paragraph on inflation and how it is measured is POV to such a degree that, as it is right now, it is useless. I have removed it. Shanebratt (talk) 05:11, 5 May 2009 (UTC)

Who Owns It?

• This article is very confusing when it comes to ownership. It begins with stating that it is a "private" bank, proceeds to mention that it is a "special kind of Crown Corporation" (owned by the queen), and then states that it is "fully owned by the government." These are three completely contradictory statements which only serve to cloud the truth. Which of the three is it? Neurolanis (talk) 21:14, 3 July 2011 (UTC)

• The bank is owned by the British Crown, go and read THE BANK OF CANADA ACT S.R., ch. B-2, article. 17.2 [2]

it is written The capital shall be divided into one hundred thousand shares of the par value of fifty dollars each, which shall be issued to the Minister to be held by the Minister on behalf of Her Majesty in right of Canada.Vjiced (talk) 16:38, 18 September 2012 (UTC)

Thank you for sharing and explaining this. I am obviously not an expert in these matters. I wonder, since these shares are under the control of the prime minister, if this gives him personally complete control over the Bank of Canada? He is holding his shares on behalf of Her Majesty, but in many ways the queen is just a symbol and has little real authority in our country since the Constitution Act of 1982. I would think that its control would be in the hands of Parliament itself, not specifically its elected leader. He is just a prime minister, after all, not a president. Neurolanis (talk) 22:56, 30 December 2012 (UTC)

In the beginning...

So the Bank began operations began operating 11 March 1935. This site says the bill creating the Bank received Royal Assent 3 July 1934. When was the bill actually introduced...? TREKphiler ^{any time you're ready, Uhura} 15:06, 9 August 2011 (UTC)

Suggestion

The sentence,

"with the remainder (95%) being "created" by commercial banks through the process of fractional-reserve banking",

should better read,

"with the remainder (95%) being "created" by commercial banks through the process of bank lending (loans create deposits)".

Just a suggestion.

Sincerely,

William.

WjtWeston (talk) 05:46, 9 February 2012 (UTC)

choosing a term to describe the increase in the Bank of Canada balance sheet 2008/09

Any increase in a central banks' balance sheet that is created out of thin air and is not the result of an investment of capital or the issue of new currency -- must be termed quantitative easing. Therefore, the Bank of Canada's increase in 2008/09 by definition is quantitative easing.

What does central bank economic theory/or an audit, call this type of balance sheet increase then? What are your thoughts?

Note, the recent 2011/12 40% increase in the Bank of Canada's balance sheet was from an investment by the government is not quantitative easing in the normal sense becasue this was not created out of thin air by the central bank. (It's still quantitative easing but not -- as the government received no money for these bonds/ BUT the debt did increase; whereas in quantitative easing the government does receive cash/bank credits for the bonds and is not a debt increase, but this is not the issue of the edit made to the Bank of Canada wiki article.) The government created new bonds out of thin air without receiving payment for the bonds and gave these bonds to the Bank of Canada -- and as this debt is still owned by the government, they own the Bank of Canada, the deficit was not increased to do this fancy bookwork/trick.

The question is what does one term the increase in 2008/09 in the Bank of Canada balance sheet -- if not quantitative easing? Yes, it was a troubled asset relief program, but where did the funds come from to do this??? --184.69.101.180 (talk) 19:31, 18 October 2014 (UTC)

In quantitative easing the central bank still buys securities. I'm not aware of a way to increase a central bank's balance sheet without creating currency to pay for assets; that's the essence of open market operations. I'm not familiar with this program you're describing at the Bank of Canada. Can you link a source? Lagrange613 19:43, 18 October 2014 (UTC)

Primary source last balance sheet increase: page 22 Bank of Canada Annual Report 2013 http://www.bankofcanada.ca/wp-content/uploads/2014/03/Annual-Report-2013.pdf Quote,"The Bank’s balance sheet has increased by 42 per cent since 2011. This expansion was mainly due to the federal government’s decision to build a prudential liquidity-management deposit of up to $20 billion at the Bank of Canada. This deposit grew by $10 billion in 2012 and by a further $10 billion in 2013, driving the increase in the Bank’s balance sheet over those years."

The government wordsmiths this as a prudential liquidity-management deposit. See this non-arms length transaction for what it is: A gives B 20 bucks, and B enters this as a deposit, and then B gives A back the 20 bucks for 20 bucks in bonds. THIS IS NOT LIQUIDITY when A never gave B the 20 bucks. A only really gave B 20 in government bonds, and A enters ownership of a deposit with B so (no deficit), no cost is claimed for the increased debt. --199.60.104.18 (talk) 20:27, 18 October 2014 (UTC)

Unless you can find a reliable source backing your interpretation it's hard not to see this as what the government claims it is: a rainy-day fund, or anyway a facility that lets them establish a rainy-day fund quickly. It is certainly not quantitative easing, because, unless I'm missing something, it doesn't change the money supply. And I still have yet to understand why this justifies your characterization of the 2008–09 bailout as QE. What you really need is a reliable source for that. Lagrange613 21:34, 18 October 2014 (UTC)

Mentioning the recent increase because this needs to be added into the article, as it is not yet in there.

To the point that the 2008/09 increase did not increase the money supply, IT DID as the equity ratios of the banks increased, as these played-with ratios are part of the money supply and determine how much these institutions can lend. Then how could they lend more if the money supply was not increased, and why the increase in the Central Bank' balance sheet. Not an easy question to answer then, if not seen as quantitative easing.

To the point of having a reference to say this is quantitative easing, the response is quantitative easing is a generic term used to describe changes in equity in the private sector created from central bank investment created out of thin air. This is what happened, if not, where did the Bank of Canada's funds come from?? It's understood/accepted that no reference, it's out, but it's right. --199.60.104.18 (talk) 22:55, 18 October 2014 (UTC)

Here is a good reference to point out what occurred was not well documented. It is from Canada's main news agency the CBC and the lead is Support for banks' more substantial than Canadians were led to believe. http://www.cbc.ca/news/business/banks-got-114b-from-government-during-recession-1.1145997 Here is a telling quote, "That data came from the US Federal Reserve, which released it publicly. But Macdonald's analysis found that the Canadian banks got a comparable amount --$41 billion - from the Bank of Canada facilities, an agency that has been far less transparent in sharing information." End of quote.

The Bank of Canada asset are mostly in government bonds, and therefore the Bank of Canada has no money, yet it had tens of billions to make purchases of private sector debt products, which is quantitative easing by definition, increasing the money supply.

Also, when Canadian banks received funds from the US Federal Reserve this was quantitative easing and increased the money supply, YET when the Bank of Canada did the same thing it is not quantitative easing and did not increase the money supply?? Quote, "Canadian lenders also dipped into a program set up by the US Federal Reserve aimed a providing cash to keep American banks afloat. CIBC and BMO took 3 billion each out of the fund. RBC and TD took 8 billion and Scotiabank drew down almost 12 billion." --184.69.101.180 (talk) 23:45, 18 October 2014 (UTC)

I said that the prudential liquidity program doesn't increase the money supply. The 2008–09 bailout did, but that alone doesn't make it QE. Not every action that increases the money supply is QE. For example, in normal times a central bank will regularly use open market operations to buy securities to push down interest rates. This increases the money supply but is not QE. Nor is it QE every time a central bank creates money, by the same argument. Your inability to produce a reliable source calling the 2008–09 bailout QE means that Wikipedia can't call it QE. Which is good, because it's not QE. Likewise, the CBC article you linked does not even contain the phrase "quantitative easing" and therefore can't be used to justify a claim that the prudential liquidity program is QE. Which is good, because it's not QE. Lagrange613 03:59, 19 October 2014 (UTC)

I agree with you that the 2011/12 transfer of government bonds (prudential liquidity program) to my nation's central bank is not quantitative easing. The origin of these funds is real government debt, and on a rainy day can be sold to raise funds, and are money supply neutral as the outflow/inflow equals. (Some economic theory does say the money supply is affected -- based on the idea credit and use of credit is the real money supply, and that asset values determine the money supply size in a world based on credit; but, this is not our debate here.) Note, it cost the government nothing to create this prudential liquidity fund, as all interest earned by the central bank is handed straight back to the government when government pays this interest on this debt.

I disagree that the 2008/09 central bank purchase can be called open market operations, as the origin of the funds were not from savings or preexisting capital. It was created out of nothing to buy these debt products. This did increase the money supply. Direct question for you is that: you can not explain were these funds used by the central bank came from to buy these debt products. Please give it a shot and tackle this question. Yes the issue is a reference is needed, that's fair, but be fair with Canada? The origin of the funds came from......??? --184.69.101.180 (talk) 17:51, 19 October 2014 (UTC)

It appears the Bank of Canada "got" the money for the securities the same way it and every other central bank "gets" its money: by creating entries in the ledgers of the securities' sellers. This is what happens in open market operations, and it's what happened here. That part is not out of the ordinary. It's what central banks do. Lagrange613 19:31, 19 October 2014 (UTC)

Thank you for the conformation. Like this answer very much. Quantitative easing is creating entries in ledgers of the securities' sellers. Clearly, obviously, it was not phrased that there was cash in hand to create the entry. Standard accounting transactions require payment by the buyer to make an entry, whereas quantitative easing the buyer, the central bank, creates an entry in the bank, without preexisting capital.

Another way to describe quantitative easing is: banks lend IOUs to people when they borrow. The bank multiplier is a cover story to hid this practice. Where those IOUs are deposited allows that bank with the new deposit from that IOU can lend again the IOU. Note, banks do not need more IOUs to make loans, only that they honour IOUs for the IOUs they have made. Quantitative easing plays with the tabulation of those IOUs allowing banks to lend more IOUs. Our central banks are the gate keepers that tabulate/regulate these credit clearance systems. The money supply is not fixed by the central banks, the money supply is the aggregate amount of IOUs issued. Quantitative easing is merely the central bank creating an entry in the ledgers of the securities' lenders balance sheet, so the securities' lenders can claim/reduce the amount of IOUs they must recognize/ and or can lend more IOUs which other banks must respect to play in the game.

We agree that no preexisting funds were given the securities' sellers in the 2008/09 purchase by the Bank of Canada. We agree that the sale of government bonds would have provided the cash to make the entries in the ledgers of the securities' sellers is not what occurred in 2008/09. DO WE AGREE?? --199.60.104.18 (talk) 20:44, 19 October 2014 (UTC)

No, an open market operation is "creating entries in the ledgers of the securities' sellers". That's for expansionary monetary policy. For contractionary policy, the central bank performs the inverse operation, selling securities it has and debiting the buyers' accounts. The money does not (and does not need to) "come from" anywhere, because the central bank is the authority that issues and removes money from the financial system. That money then gets multiplied by banks through fractional-reserve banking. QE is just a special case of expansionary monetary policy when interest rates are near zero. There are processes other than QE in which money is created. The creation of money is not the defining characteristic of QE. Lagrange613 23:07, 19 October 2014 (UTC)

Reverted back to Lagrange's edit. He's right. See Bank of Canada 2008 Annual Report http://www.bankofcanada.ca/wp-content/uploads/2010/04/annuel_report08.pdf note 10 page 62: the 24 billion came from the federal government deposited into the central bank. The Paper trail how the government obtained/came up with these funds to deposit with the Bank of Canada is questionable, and could mean this is quantitative easing by the government if they did not borrow these funds prior to the deposit. Thank you Lagrange for your help, patience, and insight to figure this out. --199.60.104.18 (talk) 19:49, 20 October 2014 (UTC)

Roles and Responsibilities

Buenos-Ding-Dong-Didily Dias:

I read under this section that: "It is important to distinguish between the right to "issue money," which is the right of the Bank of Canada, and the ability to "create credit," which, through legislation and regulation enacted by Parliament, is largely done by commercial banks through the issuance of loans. While all of Canada's money is created by the government through deficit spending, if "money" is thought of as the combination of issued money and bank-created credit, then presently, the Bank of Canada "issues" less than 5% of Canada's money, with the remainder (95%) being "created" by commercial banks through the process of fractional-reserve banking.[19]"

But it seems to me that if the Bank of Canada simply deposits credits into bank accounts or government, the Bank of Canada is creating credit, just like the Federal Reserve. It may be that banks do this as well, but the original credit as money comes from the Bank of Canada. Sooooo...I'd say this isn't exactly accurate. The proof would be to show that the Bank of Canada doesn't create credit at all when issuing money.

Saludos,

70.72.45.131 (talk) 23:17, 24 January 2015 (UTC)

Add Ownership to Infobox

I suggest to add to that Article Wikipedia Infobox an item about the ownership of the Bank of Canada. Most other Articles about Banks or Financial organisations include such item. Also in my personal experience this is one of the most frequent question and misconception during various debates. There is also frequent confusion in the media about that present Bank of Canada ownership. Adding that information to the Infobox could potentially clarify that and facilitate friendly discussions. Here is a suggested concise draft for discussion. With reputable sources.

Canadian Crown corporation

Francewhoa (talk) 23:16, 30 March 2017 (UTC)

References

Incorrect information in page

Disclosure: I work for the Bank of Canada. We note that the following sentence has been added to the first para of the article: "The bank is owned by Rothschild."

This is not accurate and should be removed from the article. As the article states, " In 1938, the bank was legally designated a federal Crown corporation. The Minister of Finance holds the entire share capital issued by the bank."

Here is the record of the inaccurate addition: https://en.wikipedia.org/w/index.php?title=Bank_of_Canada&type=revision&diff=804472833&oldid=803841126

--Beades (talk) 16:15, 10 October 2017 (UTC)

Banknotes

"The contract to produce the banknotes has been held by the Canadian Bank Note Company since 1935." I find this a little misleading as while true (especially now) it has been not been the exclusive provider. BA International (Giesecke+Devrient) also produced these banknotes up until the polymer changeover.Closure Announcement, 2012 I don't think this is important enough to change at the moment but if the Intro gets reworded or a banknotes section gets added, this is something that should be kept in mind.EatingFudge (talk) 05:10, 12 March 2020 (UTC)

Forthcoming update

"The capital shall be divided into one hundred thousand shares of the par value of fifty dollars each, which shall be issued to the Minister to be held by the Minister on behalf of Her Majesty in right of Canada."

So saith the article, citing the Act, but of course, this is due for an update, as Canada now has a king rather than a queen. This will involve nothing more than amending the word "Her" to read "His", of course. Shall we do this forthwith? I've just had a look at the online text of the Act — and that has itself not yet been modified. Does that indicate that the law still reads thus? Or rather, did it automatically change with the Queen's death and the King's accession and they just haven't updated the website yet? It will begin to look truly silly after a while, if it doesn't already. What's to be done? Kelisi (talk) 05:35, 18 October 2022 (UTC)

1990s low interest rates

The article says that the bank kept interest rates low to fight inflation during the 90s. But low interest rates are supposed to increase the risk of inflation but also stimulate the economy and fight unemployment. High interest rates are supposed to fight inflation, but risk causing unemployment and economic contraction. Meistro1 (talk) 13:12, 22 September 2024 (UTC)