Bank of Canada officials grilled over $10B loss, executive pay, inflationary deficits

Added: 2026-05-05

[00:00:00]Standing Order 108-3G.

[00:00:03]The committee resumes the study of the public accounts of Canada 2024 and public accounts of Canada 2025. Referred to the committee on Tuesday, December 17th, 2024 and Friday, November 7th, 2025.

[00:00:15]>> is uh for the second hour from the Bank of Canada. Thank you for coming in.

[00:00:18]Thank you for your patience. We're running a little bit behind here cuz there's some votes today.

[00:00:23]Uh Ms. Alexis Corbet, Chief Operating Officer of the Bank of Canada. Thank you for coming in. And Ms. Coralia Bullion, Managing Director and Chief Financial Officer.

[00:00:34]Uh Ms. Corbet, you have a maximum of 5 minutes or approximately 5 minutes. I'm not too heavy with the gavel here for any opening remarks you'd like to share with us. Thank you. Well, thank you very much.

[00:00:46]Thank you, Mr. Chair. Members of the committee.

[00:00:50]My name is Alexis Corbet and I am the Chief Operating Officer of the Bank of Canada.

[00:00:57]I oversee the bank's corporate corporate administrative functions including human resources, finance, data and technology premises and security.

[00:01:08]I'm here with my colleague Coralia Bullion, who is the bank's Chief Financial Officer.

[00:01:15]Coralia's role is to manage the bank's finances, ensure accurate financial reporting and explain our financial results.

[00:01:24]Before I address our financial results for the past 2 years, I want to take a few minutes to set some important context that I believe will help frame our discussion today.

[00:01:34]The bank's balance sheet is unique among Crown corporations and financial institutions.

[00:01:39]The bank carries out operations to fulfill its legislative mandates.

[00:01:46]And these operations have implications that are reflected on our balance sheet.

[00:01:53]Our legislative goal as central bank is to promote the economic and financial welfare of Canada not to maximize our returns.

[00:02:03]The bank's balance sheet is unique among Crown corporations and financial institutions.

[00:02:08]The bank carries out operations to fulfill its legislative mandates and these operations have implications that are reflected in our balance sheet.

[00:02:17]Our legislated goal as central bank is to promote the economic and financial welfare of Canada not to maximize our returns.

[00:02:28]In normal time the bank's finances are relatively straightforward.

[00:02:33]Our primary source of revenue is something called seigniorage.

[00:02:37]The bank issues bank notes, the physical the physical currency that you have in your pocket.

[00:02:42]These notes are a liability on our balance sheet. To balance this liability, we hold assets, primarily Government of Canada securities, which earn interest.

[00:02:53]That interest income, net of our operating expenses, is our profit.

[00:02:58]That profit historically in the range of 1 to 2 billion dollars annually, is returned to the federal government as a dividend.

[00:03:07]The other major liability you will see in our balance sheet is something called settlement balances.

[00:03:13]These are the deposits that the bank maintains at the Bank of Canada to settle payments at the end of each business day.

[00:03:22]They keep the Canadian payment system functioning smoothly.

[00:03:27]In times of severe economic or financial market stress, the bank has a responsibility to act as a source of stability.

[00:03:35]In such times, the bank can use a set of extraordinary measures to support the economy and to get financial markets functioning effectively again.

[00:03:45]Decisions about when and how to deploy those measures are made by the bank's governing council.

[00:03:52]My colleague Coralia and I are not involved in those decisions and we cannot comment on them today.

[00:04:00]Our job is to translate the impact of these decisions onto our financial statements according to generally accepted accounting standards.

[00:04:10]As part of these extraordinary actions, the bank buys large amounts of assets and pays for those purchases by crediting the settlement accounts of the financial institutions it buys from.

[00:04:22]This causes settlement balances to increase significantly on our balance sheet which expands by design.

[00:04:30]As I noted, settlement balances are a liability on our balance sheet and we pay interest on them.

[00:04:36]When interest rates are near zero, as they were at the beginning of the pandemic that interest cost is negligible.

[00:04:43]But when interest rates rise, as they subsequently did the interest we pay on those balances rises with them.

[00:04:50]Meanwhile, the assets on the other side of our balance sheet, the bonds we purchased, continue to earn the same fixed interest income they always did.

[00:05:00]The result is a mismatch. Our interest costs rise faster than our interest income and we incur losses.

[00:05:09]To be clear, these losses do not affect the bank's ability to carry out its mandates.

[00:05:15]The Bank of Canada cannot become insolvent in the conventional sense.

[00:05:19]Our operational capacity is not impaired nor is our ability to carry out monetary policy in the best interest of Canadians.

[00:05:29]Our balance sheet has been normalizing as the bank returned to normal operations. As a result, the bank returned to profitability in the third quarter of last year.

[00:05:41]We are here today to walk you through the numbers answer your questions and ensure the committee has a clear and accurate picture of the bank's financial position.

[00:05:51]So, thank you very much, Chair, and we welcome your questions.

[00:05:56]Thank you very much.

[00:05:58]I'll turn to and I appreciate your comments about being unable to comment on uh uh some of the uh or being here primarily to talk about the fiscal implications of the bank's position um and understand your your inability to speak on matters outside of that matter and and and you are welcome to highlight that to members if if they do go in that area and I appreciate you being here to talk about the finances. Um Mr. Dutil, c'est à vous de parler maintenant.

[00:06:25]Euh 6 minutes, s'il vous plaît.

[00:06:27]Mr. Dutil, 6 minutes, please.

[00:06:29]Thank you very much.

[00:06:32]I'd like to welcome our witnesses.

[00:06:34]I'm a little mad at you, Mr. Chair because you had said something that I was hoping to say.

[00:06:41]Thank you. I would like to thank the witnesses for telling us that there are certain areas that you can comment on and others not. That's entirely legitimate.

[00:06:49]And we know that you are administrators that will ultimately have to live with the consequences and the impacts of decisions that you may not control.

[00:06:57]Now, when there is a government deficit and the debt goes up when there are projections that are different than realities, what kind of impact does it have on interest rates and on your administrative decisions?

[00:07:13]And on the rates for interest rates for all Canadians?

[00:07:21]Thank you for your question.

[00:07:24]That is the point my colleague was making as well.

[00:07:28]As the Chief Financial Officer I am responsible for recording the transactions in that regard, but I am not responsible and I definitely don't have the expertise to answer your question because that is a question on monetary policy and the government is responsible for it.

[00:07:49]Yes, I understand the areas where you can take action, but there are financial impacts of this.

[00:07:55]When the debt increases, when the deficit increases, there are impacts.

[00:08:00]When over the course of the years when over the course of the year, let's let's just take a hypothetical case 10 billion dollars what kind of impact does that have on the workings of the Bank of Canada?

[00:08:14]What kind of impact does it have on printing money? Although of course this is now something that is virtual.

[00:08:25]Let me just take a like let me just take an example here. Let's say the deficit is 10 billion dollars.

[00:08:31]What impact does it have on the activities of the bank?

[00:08:39]Very well.

[00:08:46]When there are losses on our balance sheet that has an impact on the government public accounts because that is how the consolidation happens in the public accounts.

[00:09:01]It is clear that bank losses do not entail transfers of funds from the government to balance out those losses.

[00:09:09]Nonetheless, the Bank of Canada temporarily holds the sums that it would normally transfer to the government in times of surplus.

[00:09:19]Since the second quarter of this fiscal the bank has begun once more generating a surplus.

[00:09:28]And that surplus has been used to balance out the losses on our balance sheet, which are, as you mentioned, around 10 billion dollars.

[00:09:39]What we have done is that we produced a projection with a market estimate based on the market projections of future interest rates.

[00:09:50]Using that information we project that by mid-2030, we will be able to balance out all of the accumulated losses.

[00:09:58]And by the second half of 2030, we should be able to return those funds to the Receiver General as we were doing previously.

[00:10:09]In the 2020s, with the pandemic, there were there was serious disruption throughout the world.

[00:10:21]There were major deficits.

[00:10:24]We understand that it was a situation that no one could have predicted.

[00:10:34]The losses generated by COVID seem to have now disappeared because as you're saying, we have returned to a surplus. Is that so?

[00:10:46]They have not entirely disappeared yet.

[00:10:50]But by the middle of 2030, that will be the case.

[00:10:54]Based on our our projections, that of course can change because it depends on current market projections.

[00:11:08]Does the bank currently have a strategy for avoiding this kind of situation in normal times, of course? I'm not referring to the pandemic.

[00:11:15]But we see that recovering from that took a long time, and there was also the unfortunate habit of compulsive deficits.

[00:11:24]Do you have precautions in the Bank of Canada to avoid this kind of situation in years to come?

[00:11:35]The bank has resumed regular operations on the balance sheet.

[00:11:41]The bank has a strategy where in future all interest rates and the duration of investments, I will use the English word, they will be matched with the interest rates.

[00:12:00]And we will ensure that we are balancing out with with where we are in the red, and we will try to ensure that there is this balance that will compensate for the imbalance in the past.

[00:12:11]And what is the impact when deficits are much higher than they were in the past?

[00:12:15]What is the impact?

[00:12:21]Due to the nature of its mandate, the bank can continue to operate.

[00:12:24]There is not an impact on Bank of Canada operations or its capacity to carry out its obligations.

[00:12:33]Nonetheless, there is a period where we will have where we have to wait until there's a surplus so that we can compensate for those losses. Mr. McKinnon, you have the floor for 6 minutes, please.

[00:12:46]Thank you, Mr. Chair.

[00:12:48]Um I'm interested in uh You you mentioned that the the bank cannot go insolvent. So, when you uh spend more than you bring in, does that mean you borrow money from the Receiver General? Is that what I heard?

[00:13:05]No, in fact, the government does not inject funds into the Bank of Canada. We are an autonomous organization, and so uh we have the losses in our books until such point that the surpluses that we generate, which we've started to generate in the second quarter of this year, will be used to offset those accumulated losses. And so, what I was saying is that by mid-2030, all of those accumulated losses will be offset, and after they are offset, we will resume remittances to the Receiver General of Canada. That being said, the mandate of the bank is not affected. As my colleague said, the bank um the bank's mandate in terms of uh the economy and and the financials of the the country continues. However, there's a question of timing of when we are able to resorb or offset those losses based on the financial results of the bank.

[00:14:08]I guess I'm >> [clears throat] >> you guys are in a unique position, obviously. Uh I'm interested you if you if you spend more than you earn, but you're not borrowing money, where do you how do you make that how do you close that gap in the interim?

[00:14:26]Um it's important to know that in normal times, the Bank of Canada um prints money.

[00:14:34]And the interest so the proceeds from those bank notes that we put out in the market, we use to invest, and we generate revenue on those investments that we call seigniorage. In normal times, seigniorage is sufficient to pay for all of the bank's operating expenses and have a surplus that we remit to the Receiver General.

[00:14:59]Taken in isolation, that is still the case. We still have surpluses generated by the normal activities of the bank.

[00:15:09]The challenge is that those losses that we have is not because we spend more.

[00:15:14]Those losses are solely or were solely generated by the fact that the bank purchased large assets in the market during the pandemic. And that was to respond to its mandate in terms of make coming in uh at the pandemic in extraordinary circumstances.

[00:15:35]And so, it the losses are generated and solely generated by the fact that there was a mismatch in the interest rate caused by the fact that the interest rate on the assets that were purchased were fixed rate with a coupon, and that the the liability that matched that is a variable rate. So, you have stable revenues coming in, and expense on your liabilities, which at the beginning of the pandemic was really low. You'll remember interest rates were 0.25%.

[00:16:10]So, we had large revenues, small expenses, generated large surpluses, about $2 billion more a year in 2020 and 2021, which we remitted to the government, Receiver General uh of Canada.

[00:16:27]In about 2022, interest rates started rising.

[00:16:32]They went from 0.25% all the way to about 5% in March 2024.

[00:16:38]When that happened, revenues remained stable, but then the interest expense went up.

[00:16:46]And that is exactly what caused the losses in our books.

[00:16:50]And we're now back into a situation where the revenues are higher than our expense, and we're now generating a surplus, which is now being used to offset those losses that we accumulated.

[00:17:03]So, I guess what I'm hearing, and I'm not sure I'm hearing correctly, is these losses and or gains are >> [clears throat] >> just bookkeeping entries. There's no money transfer involved in whatsoever, right? Exactly. That's very well said.

[00:17:16]So, I'm trying to put this in the context of my credit card. It doesn't work. Um Um So, I guess I want to segway now into So, the Prime Minister wants to make a distinction is making a distinction between capital spending and operational spending. And how how is that going to affect the public accounts?

[00:17:38]Bank of Canada's point of view, that doesn't impact us at all. We follow international financial reporting standards, and we already differentiate between capital assets and operating expenses, so there's no impact on our accounting or our financial statements.

[00:17:56]Okay.

[00:17:57]Um So, I'm I'm not sure if you can comment on this. I'm not sure if it fits, but can you comment on the on the the relationship between government fiscal policies and and monetary policies? And I guess the bank is supposed to uh control inflation what somewhat by by adjusting interest rates and so forth.

[00:18:17]That's monetary policy. Is is that correct?

[00:18:20]Uh that is correct, yes. And and but uh um So, you are able to to Are you able to speak to monetary policy at this point?

[00:18:29]No.

[00:18:30]That is not my area of expertise.

[00:18:33]Uh I can tell you that the Governor and the Senior Deputy Governor of the Bank of Canada attend um the Finance Committee regularly, and they are scheduled to attend the meeting on May 4th uh right after the April Monetary Policy Report. And so, they will be able to answer those questions at that time.

[00:18:53]Thank you very much. Thank you.

[00:18:55]Could Could I Mr. Lemire, just to put things out, just for clarification, cuz I and and maybe I need a little lesson here as well, but I don't want I I don't want your testimony to be taken kind of I want to make sure we're clear here. Um There is a liability transfer, is there not? When the when when when the bank is um has excess returns, it appears on the public accounts, reported in the budget, as a financial gain for the government of Canada.

[00:19:32]And when there's a loss, there is that also appears in the public accounts through the budget. It's only because Mr. McKinnon asked about, there there really is no impact. There is an impact on the on the on the budget and the public accounts when there's a a a loss or a profit, is that is that right? And and if if if you all understood that, that's fine. I didn't quite hear that. I heard that it was kind of neutral.

[00:20:00]And it just stays within the bank, but that's not accurate, is it?

[00:20:04]No, you are you are correct. The the Bank of Canada financials are rolled into the public accounts. And so, when we have a surplus result, it is added to the public accounts results. And when there's a loss, it is deducted. That is accurate.

[00:20:20]Thank you. You might have all understood that. I I just want to make sure we're clear on that cuz I think that matters.

[00:20:24]Uh Mr. Lemieux, 6 minutes.

[00:20:27]Merci, Mr. Lemieux. Mr. Lemieux, 6 minutes.

[00:20:31]Yes, let me follow up just and see if I understand. For the third consecutive year, the Bank of Canada will lose money. That's only happened three times since 1935, which was in 2023, 2024, and 2025.

[00:20:44]If I understand correctly, you are purchasing Canada's debt. And that was done during the pandemic at a very low interest rate.

[00:20:54]You are not getting much interest on those bonds, but commercial banks are currently receiving an interest rate of around 2.5%.

[00:21:02]That explains your annual deficit. Is that correct?

[00:21:07]Is it that the banks are Is it that banks are making more interest than the Bank of Canada is?

[00:21:14]So, instead of helping out the taxpayers with your dividends, it is instead the banks, the commercial commercial banks that are getting richer. Is that Is that correct?

[00:21:27]Answer, I'm not an expert on what you're speaking about, but what I can say is that when the Bank of Canada placed investments in the market through financial institutions at the beginning of the pandemic, those investments became a part of our balance sheet.

[00:21:48]In addition, we credited the deposit accounts that are maintained by those institutions.

[00:21:56]We do receive interests on those investments.

[00:22:00]But, we are also paying interest rates on these deposits in at the banks.

[00:22:06]Inaudible for the interpreter.

[00:22:07]Microphone, please.

[00:22:14]Question was inaudible.

[00:22:16]Answer, yes, we have interest rate costs for the deposit accounts at those institutions.

[00:22:25]Yes.

[00:22:29]I am the member for Abitibi-Témiscamingue, which is one of the biggest mining and gold areas in Canada. So, I would just like to take this opportunity to speak a little bit about history. For a long time, Canada held and bought gold. In 1965, it was stated that Canada had a hundred or a thousand and twenty-three tons in its reserves, rather.

[00:22:50]And probably a great deal of that came from Abitibi-Témiscamingue.

[00:22:54]But, 40 years ago, Canada started reducing its reserves.

[00:22:59]And the last ounce of gold was sold around 10 years ago.

[00:23:04]Today, when we think about to today, we could evaluate that 1,000 tons at $235 billion. So, why that historic decision to slowly sell the Canadian gold reserves?

[00:23:20]Answer, thank you for the question.

[00:23:32]The gold you're speaking about was part of the federal government's strategy.

[00:23:38]In my role, I am not responsible for the federal government's debt.

[00:23:44]But, my colleagues at the bank cooperate with the government to carry out the transactions in order to respond to the government's strategy. Therefore, I cannot answer your question.

[00:23:58]In 2022, the former Bank of Canada governor, Stephen Poloz, stated that this was a decision that was up to the minister to the Department of Finance and the and the Canadian government. Has the Bank of Canada been influenced by the Canadian government in order to sell its gold reserves?

[00:24:14]And did that happened more during Liberal Conservative periods?

[00:24:21]I am not able to respond to your question because that is not within my area of expertise.

[00:24:29]Canada is now the only country in the G20 that does not have gold reserves, even though my region, Abitibi-Témiscamingue, continues to produce an abundant amount of gold.

[00:24:40]What could justify a policy like this one, especially given that gold is continue is considered a sure investment?

[00:24:49]Are there considerations to to resume having gold in the Bank of Canada's reserves?

[00:24:55]Answer, my role does not involve any of those discussions.

[00:25:00]Inaudible for the interpreter.

[00:25:01]Microphone, please.

[00:25:08]According to the World Gold Council, 85% of world of global central banks are planning to increase their gold reserves. But, I understand that we will not be able to get the Bank of Canada's opinion on this.

[00:25:23]We heard an interview stating that Canada once had over 1,000 tons of gold, but it sold it all, and that that was a critical error, according to this expert.

[00:25:35]The only type of currency that is not a debt to another country is holding gold. So, I would invite you perhaps to reflect on the possibility of resuming this strategy, holding gold. I would have liked to hear more about it, but I will leave it as food for thought.

[00:25:54]Because I think it would be good to own our own resources.

[00:25:59]Thank you, Mr. Lemieux. That was very interesting.

[00:26:03]Perhaps, when the governor of the Bank of Canada is at the Committee of Finance, you'll be able to ask these questions.

[00:26:09]More than $4,300 an ounce, if I'm not much mistaken. So, we should consider that. When we consider that it was sold at $350 an ounce. Uh beginning our our our next round, which consists of five members of various time. Mr. Kurek, you'll kick us off with 5 minutes, please.

[00:26:25]Thank you. And I appreciate all the witnesses coming in today.

[00:26:29]So, when the government runs large consecutive deficits, um >> [clears throat] >> like we're projecting another big deficit in the budget that was passed, uh that puts more money into the economy and drives inflation, correct?

[00:26:46]That is a monetary policy uh question, which I'm not an expert in. Okay, fair enough. Thank you.

[00:26:53]So, um now, by your explanation, you had said that the bank uh currently well, it's holding billions in losses, but largely because the highest higher interest rate on reserves while holding low-rate bonds. Is that correct? Yes.

[00:27:08]Okay.

[00:27:09]So, and this is necessary to bring bring down inflation, correct?

[00:27:15]I was part of the the interest rate is a decision of monetary policy. Yes. Okay.

[00:27:21]Um So, while the government runs deficits and inflation increases, uh the Bank of Canada needs to run higher interest rates, correct?

[00:27:33]To to to to be profitable, I I guess, or I I'm not comfortable answering the question cuz I'm not sure I follow cuz that's not my area of expertise.

[00:27:44]Um Not sure I understand your question.

[00:27:49]Okay.

[00:27:50]Um You're on the right track. That is economics 101. So, yes, the the bank would run higher interest rates to combat inflation.

[00:27:59]Yeah, that that's what I'm Yeah, sorry.

[00:28:02]I'm I'm just I thought I asked a pretty pretty simple question. Um Again, so if the government runs deficits and inflations inflation increases, the Bank of Canada needs to hire like would Ms. Corbett be able to answer that then, or Your question is really one for the governor and the senior deputy governor, not for us. We're we're not involved in those decisions or the why we would do one or the other.

[00:28:33]I'm just going based off of your explanation earlier. So, I mean, if I I I was under the presumption I was was under the impression that if you could fill us in with all that information, which I'm just I've got my notes based on what you said. So, my simple math my layman math is is saying that but I understand that you're not comfortable. So, I won't press you anymore on that. Um I guess my next question is um at any point of these this period of losses, did did the bank advise the Liberal government at the time of its irresponsible fiscal strategy?

[00:29:09]Could Could you know, and did that create issues for the bank's balance sheet?

[00:29:15]Or are you allowed to Are you allowed to answer that?

[00:29:18]I I can't answer that.

[00:29:20]I'm not involved in those types of discussions.

[00:29:23]We we are we we record the transactions that are made through decisions by the governor and the governing council, which we're not involved in. But, once those transactions are made, then we record them in the bank's financial statements.

[00:29:40]Okay. Uh what kind of checks and balances are in place to make sure losses of this size are prevented?

[00:29:47]Yes. So, um the the bank has um restarted, resumed normal um operations, and through that, it has implemented a strategy to ensure that there's a matching between the interest rate and the duration uh on the assets it it holds, and also the liabilities on its balance sheet. So, by ensuring that there's matching between those items, we are uh mitigating against the risk of future losses.

[00:30:21]Okay.

[00:30:23]That you can comment on. Like that Okay, thank you very much. Uh Can you tell us how much of the bank's current losses were caused by the size of the borrowing during the pandemic years?

[00:30:37]It's it's the total losses that were created uh through the quantitative easing or the large purchases that were done during the pandemic, which is a total of $10 billion.

[00:30:48]Okay. Okay.

[00:30:51]I think I'm good. Thank you.

[00:30:53]Thank you very much. Next is Mr. Tesser Dirksen for 5 minutes, please.

[00:30:59]Thanks very much, Mr. Chair, and thanks to our witnesses today.

[00:31:02]Uh so, it's it's no secret that the economy is facing some challenges right now, and we do expect it to remain in in a soft patch for the coming months. We've got trade conflicts that have weakened demand for exports, and the tightened uncertainty that's led to some businesses postponing expansion plans and things like that.

[00:31:19]It's hampering the economy's ability to grow.

[00:31:22]But, I know we have strong foundations in place, and I want to give you an opportunity to comment on how those foundations, whether they're policies or other protocols, are expected to support a growing economy in the coming months and years.

[00:31:41]Um I again, I just we're we cannot speak to the economy, decisions about the economy. That is the governor, the senior deputy governor, and the governing council. We can speak, however, to the financial results on the the financial statements of the Bank of Canada.

[00:32:01]Okay. Um can you give us an overview about the relationship between government fiscal policies and the monetary policies that um you pursue independently as the Bank of Canada, and how they relate to public accounts?

[00:32:18]Um the the role of the bank is to um put in place the monetary policy for the good of Canadians, and it also has a fiscal agent responsibility towards the government. And so, for example, it um through the policy that the government puts in place to manage its debt, the Bank of Canada does all the transactions to respond to that strategy. So, we have that role as well. Um That's as much as I can tell you from an operational perspective.

[00:32:58]Okay, I'll I'll yield the rest of my time because they I have more general questions that I'm getting the sense you're not comfortable uh maybe uh answering. So, thanks very much.

[00:33:07]Madame et bien.

[00:33:08]Uh on calling for Mr. Lemire for 3 minutes, s'il vous plaît.

[00:33:11]Merci, monsieur. Mr. Lemire, 3 minutes.

[00:33:17]First of all, I think it would be a good thing for our committee to invite the governor, because I think many of our questions would be well would directed to him, especially about what led to this deficit. Nonetheless, this is interesting today, and I hope that you will be able to answer my next questions.

[00:33:35]According to the public accounts, in 2025, you had income of 3.5 billion and expenditures of 6 billion, which has now brought the overall deficit to 9 billion after this 2.5 million short fall billion short fall. So, this is year-over-year losses due to the massive purchase of of uh Canadian debt. And so, these are the three first years when this has happened since 1935.

[00:34:03]What are you planning to do to repair the situation? Are you able to answer that question?

[00:34:07]Answer, yes.

[00:34:10]What is occurring is that the investments that the bank purchased in the market are now reaching maturity.

[00:34:18]And when that happens, they reduce our balance sheet.

[00:34:22]So, there is that piece.

[00:34:24]And then there's also the matter of the interest rate, which went up. That created losses. It has now gone down again.

[00:34:32]And this is a period where the revenue generated by the by the investments still on the books are now higher than the interest expenses due to our liabilities when it comes to the deposits we have in financial institutions.

[00:34:50]Currently, our revenue is higher than our expenditure, which means that since the second quarter of this year, there is a surplus.

[00:35:01]So, yes, there have been losses of $9.9 billion, nearly 10 billion.

[00:35:08]So, we are now returning to a surplus position, and that surplus is being used to absorb the losses.

[00:35:16]Question, in 2022, there were rumors stating that there would be a deficit that could be up to $5 billion, but in the end, it was actually much higher, 9 billion.

[00:35:32]So, it sounds like things reached this very serious point, and now, there will be an attempt to come back from that deficit. Nonetheless, we are still facing economic insecurity today.

[00:35:45]We can see that with the skyrocketing price of fuel, that could lead to much higher inflation or even a recession.

[00:35:55]Would you say that given that your projections for the next few years are optimistic or pessimistic? Might we find ourselves in a similar situation?

[00:36:06]Answer, our projections are based on interest rate hypotheses that are created by the market, not by the Bank of Canada.

[00:36:16]By using these market predictions, we have an objective base for our projections.

[00:36:24]And according to these projections, we will have been able to put an end to our losses by 2030. Mr. Stevenson, you have the floor for 5 minutes, please.

[00:36:32]Uh thank you. Thank you to the witnesses for uh attending today. Uh couple of my questions already asked, but I'm just going to clarify that um Mr. Dirksen asked it in a slightly different way, but how can you um ensure the final uh financial losses do not uh um influence your policies? You talked about how there's an independence between uh Bank of Canada and and the government's decisions on finance fiscal policy, but how can you uh determine your monetary policy decisions are are uh how are they particularly when they have direct implications on the government's revenues? So, I'm not sure that uh uh You're you may say that you can't quite answer that because it's policy again, but I I want to give you one more opportunity to to say it that way.

[00:37:24]I'm going to be consistent. I really can't answer that.

[00:37:27]>> fine. We'll we'll move on.

[00:37:29]Um I I got another question here about So, recently the uh Bank of Canada governor uh traveled to China alongside the Minister of Finance as part of a trade mission. While the bank operates independently, such engagements have kind of raised some questions about its broader role.

[00:37:48]Uh my concern is that the clarity of the mandate. Uh can you explain what role, if any, of the Bank of Canada plays in trade discussions uh or economic diplomacy, and how you ensure that those um activities don't blur the lines?

[00:38:05]I think I I'll I Thank you very much for your question.

[00:38:10]I I think, once again, we're not experts in this area. We weren't involved in in in any of this, and so we don't have a view to offer the committee.

[00:38:19]I I think that'll go back to you uh my colleague Mr. Lemire's suggestion that we uh we need to get the governor to answer some of these questions here. Um Can I ask then the next question I have is there's uh currently a um the Bank of Canada is uh actually going to There's a concern about the Bank of Canada as a public institution owned by Canadians, yet uh now they're in a court challenge by to compel the bank to disclose compensation for its senior officials.

[00:38:54]In other jurisdictions, uh like including the Bank of England, this type of information is proactively disclosed.

[00:39:00]Even former Governor Mark Carney's uh salaries were publicly available.

[00:39:05]My concern is transparency and accountability to taxpayers. Uh why is the is the Bank of Canada resisting the disclosure of the executive compensation? And um do you believe that the Canadians have the right to know the senior officials at the Bank of what they're being paid?

[00:39:23]Yes, so I am familiar with this case, and uh and uh so, first I'll say that the the ranges for the governor and senior deputy governor are public, uh the salary ranges. In this particular pay uh case, they were looking for a specific salary uh details, and um and, you know, given the fact that this is uh private, we uh we refused to submit those exact details.

[00:39:47]In the first complaint that was raised, this was uh supported by the uh Privacy Commissioner.

[00:39:54]It was then raised again separately by another uh Canadian, and um and in that case, we worked with the Commissioner, and there were certain parts of the question uh that we disclosed um that we hadn't disclosed the first time, and they were specifically uh questions around per diems, overtime, bilingual bonuses, and vacation pay. But, the Commissioner ultimately agreed that the remaining information constitutes personal information. And so, we're in the process of uh our legal team is in the process of preparing uh um our our application, and we expect that this will go to court in the fall.

[00:40:32]Can uh just a follow up on that, what um can you tell me you you've stated we uh a couple of times. Can we say tell me who makes the decisions on what levels are actually uh executives are the compensations being disclosed? For the uh Governor and Senior Deputy Governor, it's our Board of Directors that makes the recommendation, and ultimately it's approved by the Governor in Council.

[00:40:59]Okay. Um I think uh that's probably on I think we have to go back to uh as Mr. Lemieux's uh um suggestion, we have got some other people to uh request for testimony.

[00:41:12]Thank you. All right, then.

[00:41:14]Uh Mr. Osborne, you'll close us out for 5 minutes, please.

[00:41:18]I'll try to get 5 minutes. I'm not sure if if I will, but uh the monetary policy you you indicated uh is done for the good of Canadians, so monetary policy by the Bank of Canada has a direct impact on public accounts.

[00:41:40]Um the investments or returns or uh whether you you have a surplus or a deficit would have an impact on the books that the the public accounts for Canada. So, who determines the monetary policy for the Bank of Canada?

[00:41:59]That is the responsibility of the Governor and the Governing Council at the Bank of Canada.

[00:42:05]Okay. Do they solicit outside expertise as well, or is that all done in-house?

[00:42:12]I I wouldn't be able to speak to how they do it, but I I can tell you that they do have all the required expertise at at their disposal.

[00:42:23]Okay.

[00:42:24]Um you'd mentioned that you invest in bonds, and that they are at fixed rates.

[00:42:32]Is the Bank of Canada confined to investment in fixed-rate bonds? Do they do they invest in longs or shorts, for example?

[00:42:42]Um you know, can can you provide us some detail on the types of investment uh made by the Bank of Canada?

[00:42:51]Yes, the the majority of the um investments at the bank are made of Government of Canada bonds, but we also have T-bills, and during the pandemic, we also purchased other types of of assets that were available in the market at that time.

[00:43:09]Okay.

[00:43:10]So, you're able to invest, for example, in utilities as well. Uh you mentioned T-bills. It's not just Government of Canada bonds. You can Do you invest in in bonds from other countries, or is it just Government of Canada bonds?

[00:43:24]Uh we don't have uh in our books right now, we have mostly Government of Canada bonds. I'm unable to answer your question around what we're able to purchase or not. I can tell you that that is like a a decision made from a a monetary policy perspective. Um we did have some other like provincial bonds in our books, but I we didn't have any international that I'm aware of. Are they all domestic? Yes. Okay.

[00:43:55]Um so, do you know I mean, utilities, for example, or is it all uh bonds, provincial or or federal bonds? I I wouldn't be able to answer that, but I could get the response through the clerk.

[00:44:07]Okay, that would be helpful. That's it for me, Mr. Chair.

[00:44:11]Could Could I ask you I think I'm going to try I I there's a couple minutes left, so I'm going to ask a couple questions. Um just for the for the committee, um the process you you described as the bank taking positions by purchasing corporate corporate debt um is known as quantitative easing, which some refer to dismissively as printing money.

[00:44:34]It's that policy that that kind of co- that that coincides with the the bank the Bank of Canada's losses. Would Would you say that's a fair statement?

[00:44:44]Yes, the purchases done by the bank um the large asset purchases res- resulted in the losses.

[00:44:52]>> Yeah.

[00:44:53]It It was that policy Was that policy something that that the Bank of Canada needed the Government of Canada to uh sign off on, the Minister of Finance?

[00:45:01]I >> If you don't know that, that's okay. I'm not trying to I'm just I I So, so that policy coincides with the bank losses.

[00:45:08]The that policy had ended, but last year, the Bank of Canada announced it was going to bring back quantitative easing, buying of corporate assets, what some call printing money. Is that accurate?

[00:45:22]Um not quite. The bank um has returned to normal operations. It's not quantitative easing. It's just normal operations to manage the overall uh markets and and and its mandate.

[00:45:39]So, So, what is this there there was a there was a a news release that the bank put out. Am I mistaken?

[00:45:46]Uh let me just find here. I closed it.

[00:45:48]Um Yeah, Bank of Canada announces restart of Government of Canada Treasury Bill purchases. Is that Is that not Is that not what you call quantitative easing? Is that Is that a different program?

[00:45:58]Um it it's what we call just normal operations at the bank.

[00:46:02]So, what was that release signaling that you had ended another program or another policy that uh The So, I guess if you're saying that that was return to normal operations, what was it a return from?

[00:46:16]Quantitative tightening. Tightening, okay.

[00:46:19]Which was the reverse of easing, which was then okay. Quantitative tightening was when the assets were maturing and rolling off of our books.

[00:46:30]>> Right.

[00:46:31]Um what's going to be the what what's and you might have said this before, but just just to tie it all together, what's the potential fiscal impact of this um return to normal uh policy. I I won't call it quantitative easing, but uh Yeah. To mitigate the risk of any potential future losses related to the uh normal operations is where the bank implemented this matching uh policy of the interest rate and the duration on the assets it holds and on the liabilities that it has on its book, so that the matching will mitigate against the risk of future losses. Okay. And last question for Appreciate that. And last question for clarification, um and this relates back to Mr. McKinnon's trying to understand this as a as a credit card, as I attempted to illustrate that when when the when the Bank of Canada runs a deficit, it appears in the federal budget as a deficit, which ultimately is reported in public accounts. When there's a surplus, that appears as a uh revenues into the government budget, and it helps with the Government of Canada's fiscal position.

[00:47:43]Um you'd mentioned at your at at the start of your comment or your start of your your uh your opening that the bank's in the process of in a in correct me if I'm misquoting you or misstating you, covering that loss and being a position that it will be in a position to um cover those losses. Is that Is that right? So, will will we see um kind of larger and larger transfers to the Government of Canada on the budget as a as an asset or as a revenue, I suppose, in the coming years? Is that Is that correct?

[00:48:16]>> is accurate starting this year with a surplus, and then the upcoming years all the way to 2030. And then after that, we will be returning funds to the Receiver General of Canada.

[00:48:29]>> Okay, thank you. Which which is reported by the Finance Minister when when he or she tables the budget. Yes, thank you.

[00:48:36]All right. Yes, Mr. Kirk. Do you have a question for one of the witnesses?

[00:48:41]No.

[00:48:42]>> Oh. I'd like to move a motion.

[00:48:44]Okay.

[00:48:46]So, out of respect with our witnesses, they were very forthright in telling us what they could and couldn't answer, but I think all committee members had answers that they could not respectfully uh uh questions that they couldn't respectfully answer. So, I would like to move a motion to see if we could get either the uh the uh Governor of the Bank of Canada or a Senior Deputy Governor to come in for an hour within the next 30 days to answer many questions that we have.

[00:49:13]>> Okay.

[00:49:13]Uh that's that's in order. I'll I'll we'll hear that. Why don't I excuse the witnesses who have been uh very cooperative in speaking within their area of expertise today. So, thank you very very much.

[00:49:23]Uh I do have a a motion uh on the table.

[00:49:26]It is in order. It's it's uh and so, Mr. Kirk, you're you're welcome to speak to it, or I can go to others if they want to to address this. And I'm going to tighten up your motion. It's either the governor of the Bank of Canada or the deputy. Look, Those those are the two individuals that could that could speak on it.

[00:49:43]Just to help you out. Yes. Yes. So, simply put, we we had a lot of questions here today and out of respect they they couldn't answer them. So, I think we we we need a lot of those questions answered and let's bring them in. Let's see how we're doing here. We're we're we're not at the end of our time yet, but I'll look to other members. There's a there's a motion on the floor when the debate collapses. I'll move to a vote, but I'm going to look for comments. We miss you s'il vous plaît.

[00:50:11]Thank you very much.

[00:50:12]I am of course in favor of this motion, but regarding the translation what is the timeline for that meeting?

[00:50:26]There is no specific date.

[00:50:28]Oh. 30 days.

[00:50:31]I had heard 3 days.

[00:50:33]I thought it was ambitious.

[00:50:36]But a 30 days seems very reasonable. I will support this motion.

[00:50:40]Yes, Mr. McKinnon.

[00:50:42]I support the motion in general, but I think 30 days we have no idea what the schedule of the governor is. I would I would support inviting him and and trying to find a time that works for for him, but get rid of the 30 days from the motion. Why don't That's look why don't if you'll leave it with me, I'll endeavor to get one of the two officials in before we rise for the summer if and as soon as possible, yeah, but I'll I'll I'll work with them to get them in.

[00:51:08]Does that work? Do we have agreement there? Just just That's I agree.

[00:51:15]I'm hearing from the committee that I have I have directions from the committee to invite the governor or the deputy governor of the Bank of Canada to come in for an hour to to take questions from the committee before we rise this summer. So, motion.

[00:51:29]Wait. Okay, and that's that's that's unanimous. So, it's a All right. Without further ado, before I adjourn the meeting we're back here on Monday with Department of National Defense recruiting for Canada's military and then on Wednesday April 22nd International Students Program on Immigration, Refugees, Citizenship Canada and Canada Border Services Agency another report. So, thank you very much everyone. Little over, but we're doing well and we'll see you next week. Have a nice day.