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Macklem says government will make changes to deal with Bank of Canada losses

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OTTAWA - Bank of Canada governor Tiff Macklem says the federal government is working on legislative changes that will allow the central bank to temporarily retain profits to cover losses related to policy decisions made to boost the economy during the pandemic.

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OTTAWA – Bank of Canada governor Tiff Macklem says the federal government is working on legislative changes that will allow the central bank to temporarily retain profits to cover losses related to policy decisions made to boost the economy during the pandemic.

The Bank of Canada normally turns a profit, which it remits to the federal government as the Bank of Canada Act does not currently allow it to keep them, but as a result of the bank’s pandemic government bond buying program it is now posting losses.

Macklem says the central bank expects a period of “a couple years” of losses before its net income reverts back to normal.

Tiff Macklem, Governor of the Bank of Canada, holds a press conference at the Bank of Canada in Ottawa on Wednesday, Jan. 25, 2023. Bank of Canada governor Tiff Macklem says the federal government is working on legislative changes that will allow it temporarily to retain profits to cover losses related to policy decisions made to boost the economy during the pandemic. THE CANADIAN PRESS/Sean Kilpatrick

He says Finance Minister Chrystia Freeland has told him that the government intends to introduce legislative amendments that will allow the bank to retain earnings to offset the losses rather than give them to the government.

Once the bank returns to profitability, Macklem says, it will resume making its normal remittances to the federal government.

Last fall, the Bank of Canada posted its first loss in its 87-year history, losing $522 million in its third quarter.

This report by The Canadian Press was first published Jan. 25, 2023.

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