Senior Deputy Governor Carolyn Wilkins answers a question during a press conference at the Bank Of Canada in Ottawa on Thursday, May 16, 2019. Wilkins, the second-in-command at the Bank of Canada says maintaining the independence of the central bank will be key to aiding the economy during and after the COVID-19 pandemic.THE CANADIAN PRESS/Sean Kilpatrick

Bank of Canada’s independence key to aiding post-COVID recovery, Wilkins says

The bank’s balance sheet has more than tripled from around $120 billion in early March

The Bank of Canada will need to maintain its independence to aid the economy during and after the COVID-19 pandemic, particularly as the country’s debt levels rise, says the bank’s second-in-command.

In a speech on Monday, senior deputy governor Carolyn Wilkins detailed how the bank’s actions through the pandemic have been aimed at ensuring businesses and individuals can access lines of credit and short-term loans, and spur demand during an expected recovery through low interest rates.

The bank’s balance sheet has more than tripled from around $120 billion in early March before the shutdown, to around $385 billion as of last week as it purchases more federal and provincial bonds, effectively providing low-cost loans to finance government stimulus that federally stands at roughly $146 billion.

Wilkins said the financial risk to taxpayers is low because of restrictions around the bond purchase programs.

The country will be left with more public and private debt than before the pandemic forced a freeze on economic activity, she said.

“Whether it’s a risk of inflation or deflation, central bank credibility is critical,” she said in the text of her speech posted online by the bank.

“This requires keeping our eye on the ball in terms of our mandate and retaining the operational independence to achieve it.”

The question of keeping the bank free of political influence faced Finance Minister Bill Morneau last week when he unveiled the next governor, Tiff Macklem.

The Liberals and central bank have an “effectively working relationship,” Morneau said at the Friday press conference, adding the Liberals saw ”the independence of the Bank of Canada as critical” to the future of the economy.

Wilkins was considered a top candidate to replace outgoing governor Stephen Poloz, just as Macklem had been the favourite seven years ago when he was the bank’s No. 2 and Poloz got the top job.

READ MORE: 7.3M Canadians have received CERB, as wage subsidy pays salaries for another 1.7M: feds

The choice to appoint Macklem received praise in some quarters: private sector economists spoke highly of his skills and environment groups saw promise in his interest in the effects of climate change on the economy.

“Canada needed to move climate change to the front of the financial line, and with Tiff as incoming governor that need has been met,” said Blair Feltmate, head of the Intact Centre on Climate Adaptation at the University of Waterloo.

But there was criticism as well, including from some women’s groups who questioned why Prime Minister Justin Trudeau’s government didn’t appoint Wilkins to head an institution that has never had a female governor.

“We made the determination on who would be the best to see us through this difficult time and seven years into the future as well, and I know that Tiff Macklem will do just that,” Trudeau said Monday outside his Ottawa residence.

The bank estimates that pandemic-related restrictions, which have closed non-essential businesses and led to more than seven million workers receiving federal aid, will result in a 15 to 30 per cent drop in gross domestic product for the second quarter from its level in late 2019.

Wilkins said the bank hasn’t published a full forecast because of the uncertainty about when restrictions will be lifted. There could also be other head winds slowing a recovery, she said, citing low oil prices.

“But even in a good scenario, lost output will be made up only gradually as containment measures are lifted, people return to work and production ramps up,” she said.

That level of uncertainty is why the Liberals have yet to introduce a budget, Trudeau said.

The government had pledged to introduce the spending blueprint at the end of March, but scuttled plans after MPs agreed to put the House of Commons on an extended hiatus as the pandemic took hold.

Trudeau said the Liberals are looking at when to present a budget or an economic update.

— With files from Mia Rabson

Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

Coronaviruseconomy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Beefs & Bouquets, May 27

To submit a beef or a bouquet to the Nanaimo News Bulletin, e-mail editor@nanaimobulletin.com

100-pound gargoyle stolen from backyard in Nanaimo’s south end

RCMP asking for any information about the statue’s whereabouts

Helicopter company helps Nanaimo couple get married, socially distanced on a mountaintop

West Coast Helicopters lifts wedding onto Mount Cokely after COVID-19 cancelled previous plans

Nanaimo senior who was excessively speeding says her vehicle shouldn’t have been impounded

RCMP say they can’t exercise discretion when it comes to excessive speeding tickets

OPINION: Another world is possible as we emerge from pandemic

Nanaimo city councillor Tyler Brown says resiliency starts at the community level

B.C. legislature coming back June 22 as COVID-19 emergency hits record

Pandemic restrictions now longer than 2017 wildfire emergency

B.C.’s essential grocery, hardware store employees should get pandemic pay: retail group

Only B.C.’s social, health and corrections workers are eligible for top-ups

Edmonton, Vancouver and Toronto vying to be NHL hubs, but there’s a catch

The NHL unveiled a return-to-play plan that would feature 24 teams

Facing changes together: Your community, your journalists

The COVID-19 pandemic has changed the world in ways that would have… Continue reading

As SD84 schools look to reopen, Kyuquot and Zeballos opt out

Schools in Tahsis and Gold River will open on June 1, with 30 per cent students expected to come in

B.C. sees 9 new COVID-19 cases, one death as officials watch for new cases amid Phase Two

Number of confirmed active cases is at 244, with 37 people in hospital

Illicit-drug deaths up in B.C. and remain highest in Canada: chief coroner

More than 4,700 people have died of overdoses since B.C. declared a public health emergency in early 2016

West Coast Trail to remain closed for now

Federal government won’t open world-famous trek until its First Nations are ready for visitors

Nanaimo man scores viral hit with stop-motion tribute to ‘Schitt’s Creek’

Todd Cameron used vintage Fisher Price toys to create one-minute music video

Most Read