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, recently calling the institution “financially illiterate.”
Polieve said if elected he would extend the power of the auditor general to 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 akin to nationalization, says Poilievre campaign
Poilievre is a big supporter of cryptocurrencies such as bitcoin. He has suggested that 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.
In this environment, the central bank 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.
Central banks around the world fear that the explosive growth of bitcoin will destabilize the existing financial system.
In response, a number of banks are offering government-backed digital currencies that are issued and regulated by the nation’s monetary authority – a product that could offer the convenience of crypto with the full trust and backing of the government that provides them. has issued.
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 is ultimately up to the 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.
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Speaking to reporters outside the Bank of Canada’s Ottawa headquarters on Thursday, Poilievre said a digital currency would turn the central bank into a competitor to commercial banks, as Canadians could park their deposits with the bank-run institution. 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 wants a federal watchdog to audit the central bank
Poilievre also said that if elected, he would pass Conservative MP Andrew Scheer’s private member’s bill, which would give the auditor general the power to audit the Bank of Canada. The central bank is currently exempt from this type of oversight.
However, the Bank of Canada is already audited by two separate external firms — currently KPMG and PricewaterhouseCoopers — each year.
At least one expert, Kevin Page, the former Parliamentary Budget Officer, has said the auditor general lacks the ability to audit the central bank.
Historically, the Bank of Canada has been an institution free from political influence, so it could use monetary policy instruments to pursue price stability or an inflation target.
While the government at the time could not order this independent agent of Parliament to investigate a particular thing, Poilievre said the AG “must investigate whether the Trudeau government interfered with the independence of the Bank of Canada “during the pandemic” using $400 billion of newly printed money to fund its deficits.”
Like a number of other central banks did during the Great Recession of 2008-2009, the Bank of Canada has embraced quantitative easing over the past two years to stimulate lending and spending during a period of panic. financial. This policy ended in October 2021.