The Bank of Canada (Bank) is announcing a modification to the operational details for its purchases of Canada Mortgage Bonds (CMB) for balance sheet management purposes. Effective immediately, the Bank will be expanding the CMB securities it can purchase in the primary market to include 10-year fixed rate bond issues.

As part of the regular management of the Bank’s balance sheet the Bank acquires securities to offset its liabilities, which consist mainly of bank notes in circulation and government deposits. The Bank acquires Government of Canada nominal bonds and treasury bills outright through non-competitive bids at government securities auctions, CMB in the primary market on a non-competitive basis, and high-quality assets through repurchase agreements (term repos). “Background information on the Bank of Canada’s Balance Sheet” explains the composition and acquisition of the Bank’s assets and liabilities in more detail. 

In 2018, the Bank announced that it was expanding the assets it acquires for balance sheet management purposes to include the purchase of government guaranteed debt securities issued by federal Crown corporations and that it would allocate a small portion of its balance sheet to acquiring Canada Mortgage Bonds (the Bank held $517 million as of Nov 30, 2019). The Bank has only participated in 5-year fixed rate and 5-year floating rate note issues and is now announcing that it will also participate in 10-year fixed rate bond issues. The Bank will continue to adhere to its principles of neutrality, prudence and transparency and conduct its transactions in a manner that limits market distortions and minimizes impact on market prices.

This change is for balance sheet management purposes only and has no implications for monetary policy or the financial stability objectives of the Bank.

The Bank’s Statement of Policy Governing the Acquisition and Management of Financial Assets for the Bank of Canada’s Balance Sheet describes objectives of holding financial assets on the balance sheet and operational guidelines governing purchases of such assets.

For further information, please contact:

Maksym Padalko
Director
Financial Markets Department
Bank of Canada
613 782-7172

Scott Kinnear
Director
Financial Markets Department
Bank of Canada
613 782-7723

Media Relations
Bank of Canada
613 782-8782