Published on 01/25/2023 at 15:44
Tiff Macklem said the central bank expects a period of “a few years” of losses before its bottom line returns to normal. (Photo: The Canadian Press)
Ottawa — Bank of Canada Governor Tiff Macklem said Wednesday the federal government is working on legislative changes that would allow the central bank to temporarily hold gains to cover losses related to policy decisions in recent years and the economy boost during a pandemic.
The Bank of Canada normally makes a profit which it remits to the federal government as the Bank of Canada Act does not currently allow it to keep it. However, the central bank’s confidence in a government bond-buying program during the pandemic means it is now taking losses.
Mr Macklem said the central bank expects a period of “a few years” of losses before its bottom line returns to normal.
He said Treasury Secretary Chrystia Freeland told him the government intended to introduce legislative changes that would allow the central bank to keep its profits to offset its losses, rather than giving them to the government.
Once the bank returns to profitability, Macklem said, it will resume normal payments to the federal government.
Last fall, the Bank of Canada posted its first loss in its 87-year history, losing $522 million in the third quarter.
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