The Bank of Canada may lose up to $8.8 billion over the next few years, according to a new report warning the central bank may run into a communications challenge as a result of the losses.
the total losses over the next two to three years will add up to between $3.6 and $8.8 billion.
The other factor influencing the size of the losses is how large financial institutions' deposits at the central bank are, Tombe said. In response to the economic crisis brought on by COVID-19, the Bank of Canada dramatically expanded its assets as part of a government bond purchasing program. Also known as quantitative easing, the policy was part of the central bank's efforts to stimulate the economy.
While the losses are a first for the Bank of Canada, other central banks who also engaged in quantitative easing during the pandemic, are also posting losses. "Any other potential reputational hits that it takes might further erode public confidence in the institution," he said.
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