Pierre Poilievre vows to reverse Bank of Canada’s foray into digital currency


Conservative leadership candidate Pierre Poilievre vowed on Thursday he would up the Bank of Canada’s proposal to offer a digital currency, saying this type of financial instrument should be left to the private sector.

Poilievre has become a fierce critic of Canada’s central bank. He has tried to tie decades-high inflation to his COVID-era quantitative easing policy and recently called the institution “financially illiterate.”

Poilievre said a government led by him would expand the auditor general’s power to include the Bank of Canada and push for a review of its pandemic policies.

“Justin Trudeau threatened the independence of the Bank of Canada with half a trillion dollar deficits that forced the central bank to print money and cause inflation,” Poilievre said.

“It’s ‘Justinflation,'” he said, using his gag name for inflation rates under the Liberal government. “I will end it by restoring central bank independence, imposing independent auditing of all money printing, and stopping risky central bank digital currency.”

State crypto is akin to nationalization, Poilievre campaign says

Poilievre is a big supporter of cryptocurrencies such as bitcoin. He suggested Canadians can “opt out” of inflation by pouring money into these investments, and he doesn’t want the Bank of Canada offering a competing product.

Bitcoin has seen a volatile run in recent months as central banks raised interest rates to combat pandemic-induced inflation, making speculative investments less attractive. The price of bitcoin has fallen around 40% since its peak in November 2021.

Central banks around the world fear that the explosive growth of bitcoin will destabilize the existing financial system.

In this environment, the Bank of Canada has been exploring the viability of creating its own digital currency – digital tokens, similar to cryptocurrency, that would be pegged to the value of the Canadian dollar.

An advertisement for bitcoin is displayed on a street in Hong Kong on February 17, 2022. (Kin Cheung/AP Photo)

The Bank of Canada is not alone. A number of central banks are offering government-backed digital currencies that would be issued and regulated by the country’s monetary authority – a product that could offer the convenience of crypto with the full confidence and support of the governments that issued them. .

The European Union and China have already signaled that digital currencies will be launched in their respective jurisdictions.

Carolyn Rogers, the first deputy governor of the Bank of Canada, told members of the House of Commons finance committee on Monday that the central bank was in the “development stage” of its digital currency, although the decision to Moving forward ultimately rests with the federal government.

“We see our job as being ready, having done the work ahead of time, so that if we decide that a central bank digital currency is something that would benefit Canadians, we are ready to provide it. “, said Rogers.

LISTEN | The Front Burner podcast examines the momentum behind the Poilievre campaign:

front burner35:28Inside a rally at the leadership of Pierre Poilievre’s Conservatives

It’s still early in the Conservative leadership race, but candidate Pierre Poilievre seems to be gaining momentum. He draws large crowds to rallies across the country with the promise of making Canada “the freest country on Earth”. Front Burner producer Allie Jaynes introduces you to some of the people who attended an event in Toronto last week, and CBC Politics Senior Reporter Catherine Cullen gives some context around those crowds and how populism brand de Poilievre compares himself to former candidates. 35:28

Speaking to reporters outside the Bank of Canada’s Ottawa headquarters on Thursday, Poilievre said a digital currency would put the central bank in competition with commercial banks because Canadians could park their deposits with the managed institution. by the government.

According to a policy brief provided to reporters, the Poilievre campaign fears a push to “nationalize” deposits could lead to “politicized banking.”

The briefing paper suggests that a deposit-taking central bank would be akin to a state-owned bank and that politicians could “give blessings to voters” and “start making campaign promises of more generous interest rates for depositors or other benefits”.

Poilievre also raised the specter of the Bank of Canada tracking the financial history of its potential depositors. “It can monitor what you do, what you spend, and potentially abuse your civil liberties,” Poilievre said.

“We saw it just a few months ago when the Prime Minister invoked the Emergencies Act to freeze the bank accounts of his political opponents,” he said, referring to the measures taken against the organizers of the truck convoy demonstration in Ottawa.

Poilievre wants a federal watchdog to audit the central bank

Poilievre also said a government led by him would pass Conservative MP Andrew Scheer’s private member’s bill that would give the auditor general the power to audit the Bank of Canada. The central bank is currently exempt from this type of oversight.

The Bank of Canada is already audited annually by two separate external firms — currently KPMG and PricewaterhouseCoopers.

Kevin Page, the former parliamentary budget officer, said it was unclear what the AG could achieve with these new powers.

Kevin Page, a former parliamentary budget officer, says it’s unclear what expanding the auditor general’s powers to include the Bank of Canada would accomplish. (Chris Wattie/Reuters)

“What is the public policy imperative and rationale for the AG to conduct audits? What’s wrong? The Bank of Canada is a very transparent organization,” Page said. at CBC News.

“If there is a concern about monetary policy and a member of parliament wants to better understand how the bank conducts its operations in terms of rate setting or its balance sheet, then open forums would be best to elicit debate and scrutiny and could be used to influence the adjustment to the Bank of Canada’s strategic mandate.

Historically, the Bank of Canada has operated without political influence to use monetary policy instruments to pursue price stability or an inflation target.

While the government of the day could not order this independent officer of Parliament to investigate a particular thing, Poilievre said the Auditor General “must investigate whether the Trudeau government has undermined the independence of the Bank of Canada “during the pandemic” using $400 billion in new money to fund its deficits.

Like a number of other central banks did during the Great Recession of 2008-2009, the Bank of Canada embraced quantitative easing – what Poilievre calls “money printing” – over the past two years to stimulate lending and spending during a period of financial panic. This policy ended in October 2021.

Poilievre, who has made inflation a cornerstone of his leadership campaign, blamed the policy for the country’s inflation woes.

Experts say the current wave of inflation is largely pandemic-induced because the health crisis has driven up production costs – wages and commodity prices are higher than they were – and hampered supply chains.

A massive injection of government stimulus to support a faltering economy is also partly to blame, as there is more money in circulation for fewer goods.

To get inflation under control, Poilievre said he wanted to drastically cut government spending to reduce deficits and the national debt. He told reporters that the Liberal government’s COVID-related emergency spending was “exorbitant” and “unnecessary.”


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