What to Do? While the full effects of the Bank of Canada’s rate hikes are not yet known, there is an immediate effect on the central bank’s own finances: growing interest expenses and large financial losses. [...] There were many specific programs, but the largest – the Government of Canada Bond Purchase Program – came within weeks of the world’s March, 2020, lockdown. [...] Should Canadians be concerned? To be sure, the Bank of Canada is a Crown corporation fully consolidated within the government’s books. [...] To avoid this, another approach follows the practice of the US Federal Reserve system, which is accumulating losses in a deferred account, and must be paid back before any future surpluses are remitted to the government. [...] Whatever the eventual details, a better understanding of central-bank finances in Canada among political leaders, policymakers and the public is necessary.
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