ICYMI: Bank of Canada sets record straight on 'printing money' claim with Twitter thread News Economy BoC
While central bank officials normally hold speeches and other events to communicate their thinking and to set expectations, Laval University economics professor Stephen Gordon says its audience has traditionally been smaller than it is today.
He’s also repeatedly claimed that the central bank printed money to finance federal spending and therefore caused inflation.“There’s always been this expression of the bank printing money whenever they engage in these kinds of policies, but it’s not actually what happens,” said Jeremy Kronick, the director of Monetary and Financial Services Research at the C.D. Howe Institute.Article content
The Bank of Canada used this policy tool for the first time when the pandemic hit to fight off the risk of deflation. It bought government bonds from financial institutions using settlement balances, or reserves, that it deposited into the accounts of financial institutions and paid interest on. As the bank stated, these reserves are not the same as cash.
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