Bank of Canada reports another whopping net loss for fiscal year 2023 | General financial discussion | Discussion forum

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Bank of Canada reports another whopping net loss for fiscal year 2023
May 10, 2024
8:50 pm
Doug
British Columbia, Canada
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The latest annual report of the Bank of Canada, for the fiscal year ended December 31, 2023, is now out, and the Bank of Canada has posted another whopping, an even bigger net loss, of nearly $6 billion. To be fair, this was well telegraphed and forecast by the BoC in 2021 and 2022 that it expected "sizable net losses" for the foreseeable future. The reason? Simple math. It has a lot of federal, provincial, corporate, and consumer mortgage debt it purchased through various pandemic era programs, which dramatically compounded (i.e., expanded) its balance sheet. Much of that debt is priced at 0%, near 0%, or ultra low rates, and, at the same time, its Policy Interest Rate of 5% paid to be governments, central banks, and federally-regulated financial institutions who have deposits at the bank.

Ultimately, though, this does have an effect on the federal government's Public Accounts because the BoC's results compound the existing federal government deficit.

On the bright side, the BoC's assets (i.e., debt it holds) decreased by $86 billion in 2023, down to $292 billion from $378 billion in 2022.

Cheers,
Doug

May 11, 2024
10:13 am
savemoresaveoften
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All quite meaningless in the grand scheme of things. Assets shrinking just mean they are reversing the QE which all the central banks had been doing anyway, fully expected and we were told too.

May 11, 2024
11:11 am
AltaRed
BC Interior
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Agreed but I think we can all say that at the time of the pandemic, we had no idea how long that was going to persevere. So while the amount of QE was overkill as was the government programs in retrospect. What isn't happening and should be is even more rapid wind down of the BoC balance sheet and shrinking of government deficits. BoC has said they intend to continue QT through into 2025.

Go to https://www.bankofcanada.ca/rates/banking-and-financial-statistics/bank-of-canada-assets-and-liabilities-weekly-formerly-b2/ and click on GoC Bonds. Currently at $234.5B and continuing to decline from a year end 2021 peak of $435B. We are doing better proportionately than the US Fed Reserve.

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