Details on the Bank of Canada’s Primary Market Purchases of Canada Mortgage Bonds
This document presents operational details pertaining to the Bank of Canada’s purchases of Canada Mortgage Bonds (CMB) for balance-sheet management purposes.
The purchases have been structured in a way to limit adverse impact on the well-functioning of the CMB market and they are consistent with the Bank’s operational guidelines of neutrality, prudence and transparency (see The Bank’s Statement of Policy Governing the Acquisition and Management of Financial Assets for the Bank of Canada’s Balance Sheet). The purchase of CMB is for balance-sheet management purposes only and has no implications for monetary policy and financial stability objectives of the Bank.
The Bank’s purchases will be conducted in the primary market for CMB, on a non-competitive basis. The Bank will direct its purchase request directly to the Canada Mortgage and Housing Corporation (CMHC). CMHC, at their discretion, will decide what amount, if any, it wishes to allocate to the Bank. The Bank may participate in 5-year and 10-year fixed rate and 5-year floating rate note issues.
The Bank plans to allocate a small portion of its balance sheet to CMB purchases. Amounts of individual purchase requests will be determined by the Bank’s balance sheet needs at that time and may be zero if the Bank does not have the need to add securities to its balance sheet. The Bank will choose the amounts of individual bond purchases in a way that limits market distortions and minimizes impact on market prices. The results of the purchase transactions will be announced on the Bank’s website on the transaction date and the Bank’s overall balance sheet holdings will be updated weekly.