Evidence of meeting #154 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bank.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Grahame Johnson  Managing Director, Funds Management and Banking Department, Bank of Canada
Nicolas Marion  Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance
Marie-Josée Lambert  Director, Crown Corporations and Currency, Financial Sector Policy Branch, Department of Finance
Richard Wall  Managing Director, Currency, Bank of Canada
Justin Brown  Director, Financial Stability, Financial Sector Policy Branch, Department of Finance
Léticia Villeneuve  Economist, Trade Rules, International Trade and Finance Branch, Department of Finance
Michèle Govier  Senior Director, Trade Rules, International Trade and Finance Branch, Department of Finance
Annie Moulin  Acting Director, Arctic Science Policy Integration, Department of Indian Affairs and Northern Development
Patrick Barthold  Director, Northern Governance and Partnerships Directorate, Northern Governance Branch, Northern Affairs, Department of Indian Affairs and Northern Development
Christian Sylvain  Director General, Corporate and Government Affairs, Canadian Institutes of Health Research
Jeannine Ritchot  Executive Director, Regulatory Cooperation, Regulatory Affairs Secretariat, Treasury Board Secretariat
Don Parker  Director, Strategic Policy, Communications Security Establishment
Julie Lalonde-Goldenberg  Director General, Partnerships Development and Management Directorate, Department of Employment and Social Development
Andrew Brown  Acting Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
Cara Scales  Director, Policy Analysis and Initiatives, Employment and Insurance Policy, Department of Employment and Social Development
Catherine McKinnon  Senior Counsel, Judicial Affairs, Courts and Tribunal Policy, Department of Justice
Anna Dekker  Counsel, Judicial Affairs, Courts and Tribunal Policy, Public Law Sector, Department of Justice
Manuel Dussault  Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance
Julien Brazeau  Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance
Jeremy Weil  Senior Project Leader, Financial Sector Policy Branch, Department of Finance
Saskia Tolsma  Senior Economist, Sectoral Policy Analysis, Economic Development and Corporate Finance, Department of Finance
David Dewar  Director, Strategic Policy & Government Affairs, Policy & Strategic Direction, Department of Western Economic Diversification
Selena Beattie  Director of Operations, Cabinet Affairs, Legislation and House Planning, Privy Council Office
Marianna Giordano  Director, CPP Policy and Legislation, Income Security and Social Development Branch, Department of Employment and Social Development
Ann Sheppard  Senior Counsel, Criminal Law Policy Section, Department of Justice

6:35 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Okay. There's a subsection amendment here to the Currency Act to allow the Minister of Finance to make payments from the exchange fund account to the consolidated revenue fund. Is that part of it too? Is that just so you can flow money from this international account to the general revenue fund? Is that where it's going?

6:35 p.m.

Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance

Nicolas Marion

There are two points here.

Mr. Chair, if you would like us to speak about the next division—

6:35 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Sorry, have I moved on too far?

6:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Why don't we do that? We'll put division 5 on as well, for which we have the same witnesses.

That's on the exchange fund account, and we'll deal with questions on both, Pierre.

If Nick and Grahame can give their opening statements on division 5, then we'll have questions on both 4 and 5.

6:35 p.m.

Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance

Nicolas Marion

Would you like us to proceed with that now?

6:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Yes, please.

6:35 p.m.

Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance

Nicolas Marion

Excellent, Thank you, Mr. Chair.

The exchange fund account represents the largest component of Canada's official international reserves. In 2011, the government announced that the exchange fund account would be part of the government's prudential liquidity plan if, for instance, markets were severely disrupted or inaccessible.

The proposed technical amendments in division 5 of part 6 would clarify this objective by stipulating that the exchange fund account may provide a source of liquidity for the Government of Canada. The amendments would also clarify that funds in the exchange fund account can be transferred to the consolidated revenue fund.

6:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Dusseault.

6:40 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Just on the first point, without this amendment, the Bank of Canada would not be able to buy securities from the U.K. post-Brexit?

6:40 p.m.

Managing Director, Funds Management and Banking Department, Bank of Canada

Grahame Johnson

That's correct.

6:40 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

The legislation provides the authority for any securities that you can buy on the market?

6:40 p.m.

Managing Director, Funds Management and Banking Department, Bank of Canada

Grahame Johnson

Yes. The powers of the Bank of Canada are very specifically spelled out in the Bank of Canada Act and we cannot deviate from those at all. Specifically, the United Kingdom was included in the euro area countries. It may well no longer meet that definition, and this is a technical amendment to adjust that contingency.

6:40 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Thank you.

6:40 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Kmiec.

6:40 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

To go back to my question then on clause 224, which allows the Minister of Finance to make payments from the exchange fund account to the consolidated revenue fund, you're saying it's a technical amendment, so would this apply only to the U.K. or is this a broader change to modify how the money is transiting? With the consolidated revenue fund, would this give ministers of finance access to the international fund to transfer between the two accounts, or would it be just one way?

6:40 p.m.

Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance

Nicolas Marion

This is a technical amendment in the sense that the policy was announced by the government back in 2011 and it has been reiterated in every subsequent budget that the funds within the exchange fund account would be available for liquidity purposes if, for instance, domestic markets were severely disrupted and the government couldn't borrow on domestic markets--

6:40 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Now I have a question before you go on, because I'm going to lose my train of thought.

How are the transactions reported to the public and to parliamentarians?

6:40 p.m.

Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance

Nicolas Marion

There are a couple of different ways. There is a statutory requirement for the minister to report on the exchange fund account, on the management of Canada's official international reserves, on an annual basis. It's a document that's tabled in Parliament, typically in October, for the previous fiscal year. In addition to that, Canada adheres to IMF reporting standards, which require us to report monthly the position of the exchange fund account five days after the closing of the month.

6:40 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Would it be true to say the only mechanism that exists to make it public is that money has moved from this exchange fund into the consolidated revenue fund?

6:40 p.m.

Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance

Nicolas Marion

Under the Currency Act, there is currently a mechanism for advances to be made from the consolidated revenue fund to the exchange fund account. That mechanism exists, and some would suggest that the concept of advancement of funds embodies a concept of being able to transfer the funds back. However, from a legal perspective, we wanted to make sure it was crystal clear.

6:40 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

In the legislation?

6:40 p.m.

Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance

6:40 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

I'll go back to one of the first questions I had. This is a one-way process, correct? This would be going from the exchange fund to the consolidated revenue fund—and a public reporting mechanism exists already—but it wouldn't happen the other way. That would be done through the regular estimates budgetary process, and it would have to be reported that the government is putting money back in.

6:40 p.m.

Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance

Nicolas Marion

The reporting mechanism exists in terms of the positions of the exchange fund account, so that isn't being changed here, and amendments aren't being made to the requirements with respect to monthly and annual reporting.

This is simply to clarify that it is in fact a two-way street, and that funds can move from the CRF to the EFA, but EFA funds can also move to the CRA.

6:45 p.m.

Managing Director, Funds Management and Banking Department, Bank of Canada

Grahame Johnson

The Currency Act stipulates that advances can go from the CRF to the exchange fund account, and from the exchange fund account to the consolidated revenue fund, so it does move both ways.

Also, on the Bank of Canada's website we report the size and composition of the reserves on a weekly basis, so any change in the size or composition would be available on notice to the public on a weekly basis.