Bailliu, Kronick, Wu – Why Safe Asset Shortages Matter (When They Occur)
From: Jeannine N. Bailliu, Jeremy M. Kronick and Wendy Wu To: Canadians Concerned about Financial Markets Date: February 23, 2023 Re: Why Safe Asset Shortages Matter (When They Occur) Safe assets – debt instruments that are expected to preserve their nominal value during both good times and bad, and have ample liquidity – play a vital role in the […] Stablecoins: Sailing without a Rudder
Stablecoins are cryptographic (crypto) assets that are widely used in decentralized finance (DeFi) applications and crypto-asset trading strategies. Stablecoins offer the prospect that their “stable value” could potentially increase their use and desirability as a crypto medium of exchange by exploiting the benefits of blockchain technology, such as composability (integrating code from other products and […] Jeremy Kronick on BNN – Explaining the Bank of Canada’s Latest Transparency Experiment
The Bank of Canada released minutes of its January 25 interest rate meeting this week. Our Jeremy Kronick outlined the benefits and risks of this first-ever initiative for a BNN Bloomberg television audience.
Fiscal and Monetary Policy Need to Work Together – Financial Post Op-Ed
Since starting its fight against inflation last March the Bank of Canada has been focused on little else. That is in stark contrast with many of the country’s finance ministers, who have raised spending and increased government hiring. Coordination between our monetary and fiscal authorities would make the Bank’s job a lot easier. Failing that, however, the Bank should continue do what is necessary to get inflation back to target.
The onset of the pandemic saw unprecedented coordination between fiscal and monetary authorities around the globe, including in this country. The Bank of Canada lowered its policy rate to its effective lower bound (0.25 per cent) and then turned to less conventional monetary…
The Global Safe Asset Shortage: Why it Matters for Canada
In the decade leading up to the pandemic, safe assets did not keep pace with global demand. The supply of high-grade government bonds in advanced economies was constrained because budget deficits were declining. At the same time, the demand for these assets increased due to the aging population, more restrictive regulations on financial institutions (requiring […] Tombe, Chen – BoC Losses are Just Getting Started. What to Do?
To: Bank of Canada Governing Council From: Trevor Tombe and Yu (Sonja) Chen Date: January 24, 2023 Re: BoC Losses are Just Getting Started. What to Do? While the full effects of the Bank of Canada’s rate hikes are not yet known, there is an immediate effect on the central bank’s own finances: growing interest expenses and large […] Sabrina T. Howell – Evidence on SME Financing from the Cutting Edge of Economic Research
To: Canadian Innovation Policymakers From: Sabrina T. Howell Date: January 16, 2023 Re: Evidence on SME Financing from the Cutting Edge of Economic Research Governments around the world have numerous programs to provide funding for small and medium-sized enterprises. There are some important lessons they can draw from recent US economic research. The US Small […] Jeremy M. Kronick – Make the Bank of Canada’s Job Easier
From: Jeremy M. Kronick To: Canada’s Governments Date: January 9, 2023 Re: Make the Bank of Canada’s Job Easier When every party understands its role, better public policy ensues. For Canada’s monetary and fiscal authorities, this means central bankers ensure a stable currency value and governments create conditions for strong economic growth. Right now, however, inflation is as high […] In fighting inflation, governments aren’t making the Bank of Canada’s job any easier – Globe and Mail Op-Ed
When everyone understands the role they play, this leads to better public policy. For our monetary and fiscal authorities, this means central bankers ensuring a stable value for the currency they oversee, and governments creating the conditions for strong economic growth.
Unfortunately, we lack that in Canada right now, with inflation as high as it has been in 40 years, and an economy potentially heading toward a recession. The Bank of Canada is working hard to bring down inflation. If governments were indeed boosting the economy’s potential, it would make the bank’s job a heck of a lot easier.
With mandates that target inflation – and ones that target maximum sustainable employment as well, such as that of…
L’argent pour la biodiversité – La Presse Op-Ed
La nature a beau être aimée de tous, il sera difficile de trouver tout l’argent nécessaire pour stopper, puis renverser sa perte de biodiversité, ai-je constaté en allant fouiner à la COP15. Un beau défi pour la finance durable.
L’expression « 30 x 30 » qui a retenu l’attention fait allusion aux 30 % de la terre et aux 30 % de l’eau qui doivent être protégés d’ici 2030. Mais elle désigne aussi les 30 milliards de dollars américains* d’aide annuelle aux pays en développement promise à partir de 2030.
Ce deuxième 30 x 30 est un compromis. Les pays riches étaient réticents, eux qui n’arrivent pas à livrer les 100 milliards par an promis au Sud pour lutter contre le…
What’s Happening with the Bank of Canada’s Balance Sheet?
When the Bank of Canada buys Government of Canada bonds from commercial banks, it adds them to the asset side of its balance sheet and pays for them by adding to the banks’ deposits (settlement balances) on the liability side of its balance sheet. As a result, the Bank’s balance sheet gets bigger. Amid rising […] Le fiasco crypto de FTX – La Presse Op-Ed
« C’est seulement quand la marée se retire qu’on découvre qui nageait nu », a constaté Warren Buffett pendant la crise financière de 2008. Cette fois, des investisseurs sont surpris à poil par l’effondrement de la plateforme FTX, vedette de l’univers crypto.
Des institutionnels réputés ont perdu 1,9 milliard US dans le capital de FTX, dont Ontario Teachers, BlackRock, SoftBank, Temasek et Sequoia. La Caisse, qui a brûlé 150 millions dans Celsius, est en belle compagnie.
Pire est le sort d’un million de clients pris dans un trou de 8 milliards dans les liquidités. La faillite de la deuxième plus importante plateforme de cryptos projette une onde de choc qui fera d’autres victimes.
Voici…