First Session, Forty-fourth Parliament, 70-71 Elizabeth II – 1-2 Charles III, 2021-2022-2023 |
SENATE OF CANADA |
An Act to amend the Bank of Canada Act (mandate, monetary policy governance and accountability)
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FIRST READING, September 20, 2023
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THE HONOURABLE SENATOR BELLEMARE |
This enactment amends the Bank of Canada Act to clarify the Bank’s mandate, define the objectives of monetary policy, and establish a monetary policy committee while specifying that committee’s duties in order to better balance the Bank’s independence with its accountability to Canadians.
It also sets out assessment and transparency requirements and provides for an agreement between the Bank and the Government of Canada respecting monetary policy.
Available on the Senate of Canada website at the following address: www.sencanada.ca/en |
1st Session, 44th Parliament, 70-71 Elizabeth II – 1-2 Charles III, 2021-2022-2023 |
SENATE OF CANADA |
BILL S-275 |
An Act to amend the Bank of Canada Act (mandate, monetary policy governance and accountability) |
Whereas monetary policy has an economic impact on growth, investment, productivity and employment in Canada;
Whereas monetary policy affects the finances of households and businesses and the public finances of every province and territory of Canada;
Whereas monetary policy and fiscal policy are tightly linked and Canadians are better off if those policies are mutually reinforcing;
Whereas monetary policy has measurable redistributive effects on Canadians’ incomes;
Whereas underlying economic trends over the coming decades will be shaped by demographic shifts, the climate crisis, technological change and global political uncertainty and are conducive to generating supply shocks to prices—shocks that are minimally affected in the short term by traditional monetary policy;
Whereas a gap currently exists between the Bank of Canada Act and the Bank’s practices respecting monetary policy;
Whereas this gap fuels the impression among some Canadians that there is a democratic deficit in monetary policy management;
Whereas the Bank of Canada Act makes no mention of the objectives of monetary policy and provides for neither a monetary policy committee nor accountability, assessment or transparency requirements;
Whereas the Bank of Canada Act does not include the five-year agreement between the Bank and the Department of Finance;
Whereas the International Monetary Fund has put forward governance and transparency best practices in its transparency code, which was adopted by its steering committee in 2020;
And whereas class 15 of section 91 of the Constitution Act, 1867 grants Parliament constitutional authority over banks;
Now, therefore, His Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
1 This Act may be cited as the Balancing the Bank of Canada’s Independence and Accountability Act.
R.S., c. B-2
Permanent Committee means the Permanent Committee on Monetary Policy; (comité permanent)
End of inserted block(a) the Governor and the Deputy Governor;
(b) a Deputy Governor responsible for economic analysis, or any equivalent duty, appointed under subsection 7(1); and
(c) six external members appointed under this section.
End of inserted block(a) are not a Canadian citizen at least 30 years of age;
(b) are a member of the Senate or House of Commons or a member of a provincial legislature;
(c) are employed in any capacity in the federal public administration or the public service of a province or holds any other office or position for which any salary or other remuneration is payable out of public moneys;
(d) except as authorized by or under any Act of Parliament, are a director, partner, officer, employee or shareholder of
(i) the Canadian Payments Association,
(ii) a clearing house or participant, as defined in section 2 of the Payment Clearing and Settlement Act,
(iii) an investment dealer that acts as a primary distributor of new Government of Canada securities, or
(iv) an institution that controls or is controlled by an institution referred to in any of subparagraphs (i) to (iii);
(e) have a criminal record or is a bankrupt within the meaning of the Bankruptcy and Insolvency Act; or
(f) are not recognized in their field for their skills and knowledge in at least two of the following subjects:
(i) open-economy macroeconomics,
(ii) the financial system,
(iii) the labour market,
(iv) supply chains, and
(v) risk management.
End of inserted block(a) participate in discussions about setting the policy rate;
(b) set the policy rate by vote;
(c) adopt the annual cost-benefit analysis framework that supports policy rate decision-making;
(d) supervise the assessment of the effectiveness of monetary policy — that is to say, whether the targets are met, what economic effects monetary policy has on prices, employment, growth, investment and productivity, and what financial and redistributive effects it has on households and businesses;
(e) ensure that the use of non-traditional tools is consistent with the Bank’s mandate and the objectives of monetary policy; and
(f) represent the Bank in negotiating and drafting the agreement with the Government of Canada provided by section 14.4 and include monetary policy targets in the agreement.
End of inserted block(a) achieve and maintain relative stability in the general level of prices over the medium term; and
(b) achieve and maintain full employment.
End of inserted block(a) the Bank must publish on its public website the minutes of the meeting at which the policy rate was set and the result of the vote; and
(b) the members of the Permanent Committee are authorized to disclose to the public, in writing, the reasons for the policy rate that they set.
End of inserted block(a) the time frames for meeting monetary policy targets;
(b) the specific economic effects of monetary policy on prices, employment, growth, investment and productivity; and
(c) the financial impact on households, businesses and governments and the redistributive effects of monetary policy on the regions and groups specified by the Permanent Committee.
End of inserted block(a) the monetary policy framework;
(b) the targets for monetary policy;
(c) the methodology used to make the annual assessment of the economic and financial costs and benefits and the wealth distribution effects of monetary policy; and
(d) the triennial process for assessing the effectiveness of monetary policy provided by subsection 14.1(1).
End of inserted block(i) buy and sell from or to any person securities and any other financial instruments — other than instruments that evidence an ownership interest or right in or to an entity — that comply with the policy established by the Insertion start Permanent Committee Insertion end under Insertion start section 14 Insertion end , and
Published under authority of the Senate of Canada
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WHEREAS it is desirable to establish a central bank in Canada to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of Canada;
8 (1) The Governor of the Bank is the chief executive officer of the Bank and on behalf of the Board has the direction and control of the business of the Bank with authority to act in connection with the conduct of the business of the Bank in all matters that are not by this Act or by the by-laws of the Bank specifically reserved to be done by the Board or by the Executive Committee.
14 (1) The Minister and the Governor shall consult regularly on monetary policy and on its relation to general economic policy.
(2) If, notwithstanding the consultations provided for in subsection (1), there should emerge a difference of opinion between the Minister and the Bank concerning the monetary policy to be followed, the Minister may, after consultation with the Governor and with the approval of the Governor in Council, give to the Governor a written directive concerning monetary policy, in specific terms and applicable for a specified period, and the Bank shall comply with that directive.
(3) A directive given under this section shall be published forthwith in the Canada Gazette and shall be laid before Parliament within fifteen days after the giving thereof, or, if Parliament is not then sitting, on any of the first fifteen days next thereafter that either House of Parliament is sitting.
18 The Bank may
. . .
(g) for the purposes of conducting monetary policy or promoting the stability of the Canadian financial system,
(i) buy and sell from or to any person securities and any other financial instruments — other than instruments that evidence an ownership interest or right in or to an entity — that comply with the policy established by the Governor under subsection 18.1(1), and