Why I Pressed the Bank of Canada Governor on Billions in Losses and Currency Policy
This week at the Standing Committee on Finance, I had the opportunity to question Bank of Canada Governor Tiff Macklem on two issues that matter deeply to Canadians: our currency policy and the Bank’s financial position.
First Exchange: Currency Reserves and Exchange Rates
I asked why the Bank of Canada’s holdings of U.S. dollars have surged to a record $71 billion — up from $63 billion in January — and whether these purchases affect the Canadian dollar. The Governor insisted they do not, saying Canada hasn’t intervened in foreign exchange markets since 1998 and that we remain committed to a free-floating exchange rate.
I also raised comments from U.S. officials accusing countries like Canada of manipulating their currencies to boost domestic manufacturing. The Governor denied any manipulation, but Canadians deserve clarity on how these decisions impact our economy.
Finally, I highlighted the 150+ basis point gap between Canadian and U.S. interest rates, which makes Canadian debt less attractive to investors. The Governor admitted the gap is unusually wide and that Canada’s economy is “a lot weaker” than the U.S. — something every Canadian should be concerned about.
Second Exchange: Bank of Canada’s Losses and Balance Sheet
I then turned to the Bank’s post-pandemic balance sheet, which still holds $175+ billion in Government of Canada bonds. The Bank is carrying negative equity of $9.9 billion and has lost $9 billion on transactions. I asked whether these losses influence monetary policy decisions. The Governor said no — policy is driven by the inflation target, not profitability.
I also asked whether government deficits and mounting debt contribute to inflation. The Governor admitted that in an overheated economy, deficits do fuel inflation — but claimed Canada’s economy is currently weak.
Why This Matters
Canadians deserve transparency and accountability. These exchanges raise serious questions about:
- Record-high foreign currency reserves and their impact on our dollar.
- Billions in losses that ultimately fall on taxpayers.
- Whether government spending and debt are undermining efforts to control inflation.
As Conservatives, we believe in sound fiscal and monetary policy that protects Canadians from inflation and ensures long-term economic stability.
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