Evidence of meeting #31 for Public Accounts in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was losses.
A video is available from Parliament.
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
I'm trying to put this in the context of my credit card. It doesn't work.
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
I want to segue now. The Prime Minister is making a distinction between capital spending and operational spending. How is that going to affect the public accounts?
Managing Director and Chief Financial Officer, Bank of Canada
The Bank of Canada's point of view is that it doesn't impact us at all. We follow international financial reporting standards and we already differentiate between capital assets and operating expenses. There's no impact on our accounting or our financial statements.
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
I'm not sure if you can comment on this. I'm not sure if it fits. Can you comment on the relationship between government fiscal policies and monetary policies? I guess the bank is supposed to control inflation somewhat by adjusting interest rates and so forth. That's monetary policy. Is that correct?
Managing Director and Chief Financial Officer, Bank of Canada
That is correct, yes.
Liberal
Ron McKinnon Liberal Coquitlam—Port Coquitlam, BC
Are you able to speak to monetary policy at this point?
Managing Director and Chief Financial Officer, Bank of Canada
No. That is not my area of expertise.
I can tell you that the Governor of the Bank of Canada and the senior deputy governor attend the finance committee regularly, and they are scheduled to attend the meeting on May 4, right after the April monetary policy report. They will be able to answer those questions at that time.
Conservative
The Chair Conservative John Williamson
That's a bit odd, Mr. Lemire.
Just for clarification...and maybe I need a little lesson here as well. I don't want your testimony to be taken as.... I want to make sure that we're clear. There is a liability transfer—is there not? When the bank has excess returns, it appears in the public accounts reported in the budget as a financial gain for the Government of Canada, and when there's a loss, that also appears in the public accounts through the budget.
I ask this only because Mr. McKinnon asked if there really is no impact. There is an impact on the budget in the public accounts when there's a loss or a profit. Is that right? If you all understood that, that's fine. I didn't quite hear that. I heard that it was kind of neutral and it just stays in the bank, but that's not accurate—is it?
Managing Director and Chief Financial Officer, Bank of Canada
No, you are correct. The Bank of Canada financials are rolled into the public accounts. 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.
Conservative
The Chair Conservative John Williamson
Thank you.
You all might have understood that. I just wanted to make sure we're clear on that because I think that matters.
Mr. Lemire, you have the floor for six minutes.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you, Mr. Chair.
I just want to follow up on that to see if my understanding is correct. The Bank of Canada is going to lose money for the third consecutive year. That has happened three times since 1935, in 2023, 2024 and 2025. My understanding is that during the pandemic, you purchased Canada's debt at a very low interest rate. You are getting very low interest on these bonds, but conversely, commercial banks are currently getting an interest rate of around 2.5%. That would account for your annual deficit.
Is that correct? Are banks getting more money on their interest than the Bank of Canada on its own interest? Instead of creating wealth for taxpayers with your dividends, banks are getting rich?
Did I get that right?
Managing Director and Chief Financial Officer, Bank of Canada
I'm not an expert on that area.
However, I can tell you that when the bank purchased assets through financial institutions at the beginning of the pandemic, these investments went in our books. Conversely, we credited the deposit accounts that are maintained by those financial institutions at the Bank of Canada. Yes, we were getting interest on investments, but we also pay interest on deposits maintained at the bank.
Managing Director and Chief Financial Officer, Bank of Canada
Yes. We pay interest on the deposits these financial institutions maintain at the bank.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Okay.
I am the member for Abitibi-Témiscamingue, which is one of the leading mining and gold-producing areas in Canada. Today, I want to go back a bit in time and take advantage of your presence.
For many years, Canada held and purchased gold, so much so that in 1965, estimates showed that Canada held 1,023 tonnes of gold in its reserves. It is therefore likely that the majority of Canada's gold reserves were extracted from Abitibi-Témiscamingue's subsurface. However, from 1985, which is 40 years ago, Canada started to reduce its reserves. The last ounce of gold was sold in 2016, which is a decade ago. Today, the 1,023 tonnes of gold could be worth $235 billion.
What was the rationale for this historic decision to sell off Canada's gold reserves piece by piece?
Managing Director and Chief Financial Officer, Bank of Canada
The gold you're referring to was part of the federal government's strategy.
My role does not involve managing the federal government's debt. My colleagues and I at the bank work with the government to carry out transactions in response to the government's strategy. As such, I can't answer your question.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
In 2022, Stephen S. Poloz, the former Bank of Canada's governor, has stated that the decision was made by the Minister of Finance and the Government of Canada.
Did the government influence the Bank of Canada to sell its gold reserves? To your knowledge, did this happen more while the Liberal or Conservatives were in office?
Managing Director and Chief Financial Officer, Bank of Canada
I can't really answer that question because it's outside my area of expertise.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Canada is now the only G20 country that does not have gold reserves, even though my Abitibi-Témiscamingue region continues to produce large quantities of gold.
What is the rationale for such a policy, especially since gold is a safe-haven asset? Is there any consideration or discussion to have gold reserves in the Bank of Canada's vaults?
Managing Director and Chief Financial Officer, Bank of Canada
My role does not involve any of those discussions.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
According to the World Gold Council, in October 2025, 95% of central banks were planning to maintain or increase their gold reserves.
I do understand that we'll not be able to get the Bank of Canada's opinion on this, and I respect that.
Pierre Lassonde, the co-founder of the Franco-Nevada Corporation, stated in an interview that Canada once had over 1,000 tonnes of gold, but sold all of it at $350 an ounce, and that this was a serious mistake. He argued that gold is the only currency that is not the liability of another country.
I therefore urge you to look into replenishing gold reserves. I would have liked to hear you tell us more about that. I would urge you to give it some thought. As I said, it would be to our benefit to have our own resources.
Thank you, Mr. Chair.
Conservative
The Chair Conservative John Williamson
Thank you, Mr. Lemire. That was very interesting.
Perhaps you will have the opportunity to ask the governor of the Bank of Canada these questions when he appears before the Standing Committee on Finance.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Gold is now trading at more than $4,300 an ounce, if I'm not mistaken. We should therefore consider this issue now, especially since we know that it was all sold at $350 an ounce.