Bank of Canada to Offer Term SPRAs and May Purchase BAs over Year-end

The Bank of Canada today announced its intention to temporarily add assets to its balance sheet to offset the anticipated $2 billion to $3 billion seasonal increase in the demand for bank notes. These operations have no monetary policy significance.

Beginning in early December, the Bank will offer special purchase and resale agreements (SPRAs) for a term extending early into the new year. This facility would be offered to primary dealers subject to existing limits. The term SPRAs would be offered at the midpoint of the Bank's operating band for the overnight rate of interest. These transactions would be collateralized with Government of Canada securities or bankers' acceptances (BAs).

Depending upon the amount of term SPRAs arranged, the Bank may also supplement its balance sheet needs by direct purchases of one-month bankers' acceptances during the same period. These transactions would be undertaken through primary dealers for Government of Canada treasury bills.

These operations will be managed with due attention to market conditions and prudent risk management. The total amount of term SPRAs transacted and bankers' acceptances purchased on any day will be announced on the Bank of Canada's web site by 4:45 p.m. These assets will also be reported on the Bank's balance sheet, which is published each Friday in the Weekly Financial Statistics.

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