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

Voters in Saanich North and the Islands, here lining up outside Sidney’s Mary Winspear Centre on the first day of advanced voting. (Wolf Depner/News Staff)
It’s Election Day in B.C.: Here’s what you need to know to vote

B.C.’s snap election has already broken records for advance voter turnout, mail-in ballots

Chilliwack-Kent MLA Laurie Throness watches the results on election night. The ex-Liberal’s tumultuous campaign and the narrow margin for victory ahead of the mail-in ballot count leaves the future of the riding’s seat in limbo for at least the next week. (Facebook/Laurie Throness)
B.C. VOTES 2020: Future for incumbent Throness uncertain as riding awaits results

Chilliwack-Kent candidate hopeful, resigned waiting on final count

The chair and vice chair of Chilliwack’s School Board, Dan Coulter and Willow Reichelt, at a Jan. 29, 2019 meeting. (Sarah Gawdin/ Chilliwack Progress)
Coulter confirms plan to resign from Chilliwack school board if elected

Dan Coulter says ‘it’s a little early’ to call the election, as mail-in votes wait to be counted

Two schools in Chilliwack have sent out notices to parents or been listed on the Fraser Health school exposure event website in the past week. (Pixabay)
Two Chilliwack schools send letters out regarding potential COVID-19 exposures

One public and one private school reporting mid-October exposure events

File Photo
COVID-19 outbreak declared at Agassiz Seniors Community

First declared outbreak in Agassiz-Harrison since pandemic began

FILE – Provincial Health Officer Dr. Bonnie Henry provides the latest update on the COVID-19 pandemic in the province during a press conference in the press theatre at Legislature in Victoria, B.C., on Thursday, October 22, 2020. THE CANADIAN PRESS/Chad Hipolito
B.C. shatters COVID-19 records with 817 weekend cases; masks now expected indoors

Three people have died over the past three reporting periods

Specimens to be tested for COVID-19 are seen in Surrey, B.C., on Thursday, March 26, 2020. Ontario’s overly cautious approach to COVID-19 testing is endangering lives and hindering efforts to rein in soaring infections that are ravaging long-term care facilities, filling ICU beds and lurking silently in communities, say critics alarmed by the province’s admission that labs can handle four times the number of tests they receive. THE CANADIAN PRESS/Darryl Dyck
B.C. limits events in private homes to household, plus ‘safe six’ amid COVID-19 surge

Henry issued a public health order limiting private gatherings to one household, plus a group of ‘safe six’ only

B.C. Liberal Leader Andrew Wilkinson speaks during a drive-in car rally campaign stop at a tour bus operator, in Delta, Saturday, Oct. 17, 2020. THE CANADIAN PRESS/Darryl Dyck
Andrew Wilkinson stepping down as B.C. Liberal leader

Will stay on until the next party leader is chosen

VicPD and B.C. Conservation Officer Service teamed up to free two bucks who were entangled in a fishing net and dragging a wheelbarrow sized piece of driftwood behind them. (VicPD)
VIDEO: Police, B.C. Conservation help two bucks caught in one fishing net

Bucks were also dragging a wheelbarrow sized piece of driftwood behind them

A heavy police presence was spotted in Lumby, Monday, Oct. 26, 2020. (Facebook)
Police situation leads to ‘hold and secure’ at North Okanagan school

Police call for social media blackout in ongoing incident

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

École de l’Anse-au-sable. (Google Maps)
COVID-19 outbreak forces closure of Kelowna school

The outbreak is the first within B.C.’s school system since classes resumed back in September

FILE – B.C. Lions and Toronto Argonauts owner, Senator David Braley speaks after the CFL announced Vancouver will host the 2014 Grey Cup championship football game during a news conference in Vancouver, B.C., on Friday March 8, 2013. THE CANADIAN PRESS/Darryl Dyck
BC Lions owner David Braley dead at 79

Braley had bought the CFL team prior to 1997 season

Most Read