The Bank of Canada building, in Ottawa, on May 31, 2022.Justin Tang/The Canadian Press
Finance Minister Chrystia Freeland has appointed three new members to the Bank of Canada’s board of directors, including the first Indigenous board member, bringing the central bank’s oversight group back up to full strength.
Ernie Daniels, David Dominy and Shelley Williams will join the 15-member board, which is made up of the bank’s governor, senior deputy governor, the deputy minister of finance and 12 independent directors.
The board is not involved with setting interest rates or other aspects of monetary policy. That’s handled by the bank’s five-person governing council. But the board provides high-level oversight on issues such as accounting, strategic planning and risk management. Independent directors serve three-year renewable terms.
Mr. Daniels is the president and chief executive officer of the First Nations Finance Authority. “To the best of our knowledge, Mr. Daniels is the first First Nations member of the bank’s board,” central bank spokesperson Sean Gordon said in an e-mail.
Mr. Dominy was CEO of currency-exchange and payments business Firma Foreign Exchange Corp. until last year, and a director of the Canada Deposit Insurance Corp. from 2018 to 2022.
Ms. Williams was previously vice-president and treasurer of industrial equipment dealer Finning International Inc. and is on the board of the Boston Pizza Royalties Income Fund.
“I want to thank them for accepting these positions, which play an important role in supporting the resiliency and stability of Canada’s financial system,” Ms. Freeland said in a statement.
The appointments come as the Bank of Canada faces unprecedented public scrutiny over its handling of runaway inflation and its aggressive campaign to increase interest rates.
The central bank is also dealing with a novel accounting challenge: It is losing money for the first time in its 87-year history.
After massively expanding its balance sheet during the pandemic, then rapidly raising interest rates, the bank is now paying more interest on its liabilities than it’s earning on its assets. It reported a $522-million loss for the third quarter, and does not expect to return to profitability for several years. The bank is anticipating total losses in the range of $5-billion to $6-billion, although this will ultimately depend on the trajectory of interest rates.
These losses won’t affect the bank’s ability to conduct monetary policy. But they do create reputational and accounting challenges for both the bank and the government.
The bank is not allowed to retain its earnings, and it does not have a rainy-day reserve fund. That means the Department of Finance needs to decide whether to cover the bank’s losses directly, or come up with some other method that would allow the bank to make up for the losses once it returns to profitability. That may require a change to the Bank of Canada Act.
Mark Rendell