POLICY: BOC Balance Sheet CAD275B From CAD216B Last Week

The Bank of Canada’s balance sheet grew to a record CAD275.2
billion as of April 8 from CAD215.6 billion a week earlier, led by a surge in
emergency repo agreements.

Assets on the central bank’s balance sheet have nearly doubled from
CAD154.1 billion two weeks ago, far more than during the global financial

The BOC cut interest rates to 0.25% March 27 and set a weekly target of
CAD5 billion of Canadian government securities purchases. Governor Stephen Poloz
signaled asset purchases are now the driver of monetary policy because he
doesn’t think negative interest rates will be effective in stabilizing financial
markets. The BOC has a policy announcement scheduled for April 15.

The central bank is also buying 40% of new provincial government bills, and
set up programs to backstop short-term commercial loans and provide term repos.

Securities purchased under resale agreements rose to CAD110.7 billion from
CAD64.8 billion and CAD33.5 billion in the prior two weeks. The old record was
CAD38 billion in December 2008.


Holdings of short-term credit known as Bankers’ Acceptances climbed to
CAD38.8 billion from CAD34.5 billion on April 1. The BOC held none of those
assets as of March 18.

Purchases of provincial money-market paper climbed to CAD2 billion from
CAD845 million last week. There were also CAD8.9 billion of “advances.”

Holdings of Canada bonds rose to CAD83.3 billion from CAD77.7 billion.

On the liabilities side of the balance sheet, the “Members of Payments
Canada” entry jumped to CAD134.1 billion from CAD85.4 billion.