Gravelle: Getting to a new normal

From bankofcanada.ca Watch this video at https://www.forexfactory.com/news/1274380-gravelle-getting-to-a-new-normal.

A balance sheet is a financial statement that shows what an organization owns (its assets) and what it owes (its liabilities). At the Bank, we have financial assets on our balance sheet to support our core policy functions—not to make a profit. For every liability on our balance sheet, we need a corresponding asset. The Bank’s balance sheet has three main types of liabilities: Cash: the bank notes in wallets and cash registers across the country Government deposits: the funds that the Government of Canada (GoC) deposits with us to meet its day-to-day banking needs Settlement balances: the reserves used to settle wholesale payments in the financial system Before the COVID-19 pandemic, the Bank regularly bought government bonds as assets to manage our balance sheet. But during the pandemic, we bought a lot more of them—first to stabilize the financial system and then to support the economic recovery. Our balance sheet grew by a lot and this growth was reflected in higher settlement balances. Since April 2022, we’ve been shrinking our balance sheet by using quantitative tightening (QT). This means that we have been letting our GoC bonds “roll off” the balance sheet as they mature, and we don’t buy new ones to replace them. Our goal is to get our balance sheet back to normal, where our assets simply offset our liabilities. Learn more about how our balance sheet reflects our unique role