MNI POLICY: BOC Balance Sheet Grows To Record CAD320B

By Greg Quinn

     OTTAWA (MNI) - The Bank of Canada's balance sheet grew to a fresh record of

CAD320 billion this week and is poised to balloon further after policymakers

committed to buy up to CAD60 billion of provincial government and corporate

bonds. 

     The central bank said Friday that assets on April 15 climbed from CAD275

billion a week earlier. Assets on the central bank's balance sheet have now more

than doubled from CAD154 billion three weeks ago, far more than during the

global financial crisis. 

     This week's increase was again led by repo agreements, to CAD143 billion

from CAD111 billion. Canada government bond holdings climbed to CAD90.2 billion

from CAD83.3 billion.

     The BOC made asset purchases the focus its Wednesday policy decision by

affirming the 0.25% overnight borrowing rate is the effective lower bound and

pledging to do whatever is needed to stabilize markets. Policy makers boosted

their plan to buy at least CAD5 billion a week of federal government bonds,

saying they will "increase the level of purchases as required to maintain proper

functioning of the government bond market." The BOC also said it would buy 40%

of federal T-bills and lengthen term repos out to 24 months.

     --PROVINCIAL PAPER

     Holdings of short-term credit known as Bankers' Acceptances declined to

CAD37.6 billion from CAD38.8 billion a week ago. The BOC held none of those

assets as of March 18.

     Purchases of provincial money-market paper climbed to CAD2.8 billion from

CAD2 billion last week. There were also CAD9.9 billion of "advances." 

     On the liabilities side of the balance sheet, the "Members of Payments

Canada" entry jumped to CAD169 billion from CAD134 billion.

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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