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December 23, 2025

Letter to industry - Update on Trust Tax Issue

This letter is in reference to the letter published by the Bank of Canada on September 8, 2025, indicating that there may be unintended consequences under the Income Tax Act for Payment Service Providers (PSPs) seeking to comply with the Retail Payment Activities Act (RPAA). Specifically, the September letter noted that there could be tax consequences or administrative burden under the Income Tax Act for PSPs seeking to safeguard end-user funds using the “in trust in a trust account” method while retaining interest income on the end-user funds they hold.
Content Type(s): Press, Announcements Research Topic(s): Retail payments supervision

Portfolio Rebalancing Channel and the Effects of Large-Scale Stock and Bond Purchases

Staff Working Paper 2025-38 Sami Alpanda, Serdar Kabaca
We quantify the effects of large-scale stock purchases by a central bank and compare these to bond purchases. We find that the central bank’s equity purchases would lower the risk and term premiums on stocks and long-term bonds, respectively, and thereby stimulate economic activity.
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