Finance Committee on Nov. 26th, 2020

[The Chair, Liberal, Wayne Easter]

Mr. Falk, the floor is yours.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you, Mr. Macklem and Ms. Wilkins for your presentation.

I am just wondering how much of the federal debt the Bank of Canada holds.

[Tiff Macklem]

We hold roughly 30%.

[Ted Falk, Conservative, Provencher, MB]

That amount would be what?

[Tiff Macklem]

You mean the actual number? It is $343,905,000,000 as of about a week ago.

[Ted Falk, Conservative, Provencher, MB]

Of that amount, how much has been added since March?

[Tiff Macklem]

The main source of additions would be the government bond purchase program, and that would be $162,979,000,000. There are also some additions: some treasury bills have been added. Those are very short-term debts, so those are rolling off.

[Ted Falk, Conservative, Provencher, MB]

Has the current government come to the Bank of Canada and asked for a credit limit?

[Tiff Macklem]

No.

[Ted Falk, Conservative, Provencher, MB]

Have you provided it some guidance on a credit limit?

[Tiff Macklem]

No. Let me just underline—

[Ted Falk, Conservative, Provencher, MB]

So, it's—

[Tiff Macklem]

—that we are not funding the government. The government issues its debt in markets; market participants buy that debt, and then we're buying it in the marketplace from those participants. When that debt matures, whether it is on our balance sheet or anybody else's, the government will need to pay it back.

[Ted Falk, Conservative, Provencher, MB]

What level is the Bank of Canada comfortable with?

[Tiff Macklem]

Do you mean what level of purchases?

[Ted Falk, Conservative, Provencher, MB]

What level of federal government bond purchases is the bank comfortable with?

[Tiff Macklem]

Currently we're at about 30%. Other central banks have issued guidance that if the central bank holds more than 50% to 70%, that could start to impair market functioning. The Federal Reserve has indicated that for them it would be about 60%. We're at 30%, and keep in mind that before the crisis we were at about 15%. We regularly hold some on the balance sheet, but we have quite a lot of room. Something in that range would start to get uncomfortable.

[Ted Falk, Conservative, Provencher, MB]

How much of the current debt—

[Tiff Macklem]

We have a long way to go to get there.

[Ted Falk, Conservative, Provencher, MB]

That's correct. What percentage of the debt that you currently hold has short-term or less than 10-year maturity?

[Tiff Macklem]

I can—

[Carolyn A. Wilkins, Senior Deputy Governor, Bank of Canada]

I know the average term to maturity of the government—

[Tiff Macklem]

I have those numbers, if you want to hold on for a second. When you get to—

[Ted Falk, Conservative, Provencher, MB]

I know you mentioned—

[Tiff Macklem]

They're changing every week.