Central Bank's Actions in Sub-Prime Crisis Highlight Need for Updated Bank of Canada Act: C.D. Howe Institute

    TORONTO, Dec. 4 /CNW/ - The Bank of Canada's actions during the recent
sub-prime lending crisis underline the need for an updating of the Bank of
Canada Act, according to an e-brief released today by the C.D. Howe Institute.
When trouble erupted last summer in credit markets around the world, several
central banks, including the Bank of Canada, took special steps to ensure
short-term financing was available to financial institutions. For the Bank of
Canada, these steps included extending the list of securities it would accept
as collateral when providing financing.
    However, according to the e-brief by John-Paul Koning, the Bank's actions
in August may have exceeded its statutory authority. If Parliament believes
the Bank should have the scope in law to act as it did, accepting some
commercial financial securities as collateral - without requiring the Governor
to declare a financial market emergency - legislative changes are needed.

    For the e-brief go to http://www.cdhowe.org/pdf/ebrief_50.pdf.

For further information:

For further information: Finn Poschmann, Director of Research, C.D. Howe
Institute, (416) 865-1904, Email: cdhowe@cdhowe.org

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