The Bank of Canada’s Balance Sheet: Bigger than During the Financial Crisis
July 30, 2013 1 Comment
During the 2008 financial crisis, the Bank of Canada intervened with an unprecedented 50% expansion of its balance sheet to a total of nearly $80 billion. This was done by creating money and purchasing assets from the big banks in order to add liquidity to the market.
By mid-2010, they had unloaded these emergency acquisitions and their balance sheet returned to pre-crisis levels.
But now, after years of growth, the Bank of Canada’s balance sheet is bigger than ever. The BoC holds nearly $90 billion in assets.
But the crisis is over, isn’t it? The Bank of Canada is trying to keep the Canadian dollar down and interest rates low. They are acting like the crisis is not over, or like another crisis is waiting to emerge.