Skip to main content

The Globe and Mail

Carney stands by ‘dead money’ comment

Mark Carney, the Governor of The Bank of Canada, listens and answers questions during a press conference that followed a speech he delivered to the Greater Kitchener-Waterloo Chamber of Commerce in Kitchener-Waterloo, on Monday, April 2, 2012.

Deborah Baic/The Globe and Mail

Bank of Canada governor Mark Carney says he's sticking to his assertion that Canadian companies are sitting on "dead money."

The central bank governor's words Friday followed a bank analysis that suggests there's little evidence to support that criticism, which has been levelled both by Carney and Finance Minister Jim Flaherty.

The two have called on corporate Canada to either put cash stockpiles to work or give the money back to shareholders through dividends.

Story continues below advertisement

"I stand by every single word that I said," Carney said.

"Look, the facts are the facts – there's a lot of cash and there's a lot of work to be done."

Last month, the country's central banker said while companies might be holding on to cash because of global economic instability, those funds amount to "dead money" for the economy.

During the last financial crisis, credit dried up and many companies found it difficult to borrow money, prompting them to hoard cash now in case credit becomes scarce again.

On Friday, Carney conceded that Canada's economic growth hasn't been "spectacular" but added it has been "solid."

And while it's a challenging global economy, "there are tremendous opportunities in this country and this is an economy that works."

"The challenge is do we try to wait out a crisis or an adjustment period ... or are we going to deal with the things that we can deal with," he said.

Story continues below advertisement

"Individual companies, individuals will make those decisions, but the better ones will get on it and already are getting on it."

Carney added that cash holdings, relative to assets, have doubled over the past decade.

"At some point those cash balances could become excessive, so companies will make those judgments. I'm not dictating to companies what they need to do."

The value of that dead cash pile was pegged at some $526-billion by the Canadian Auto Workers' union last month.

A National Bank Financial analysis this week found that the 327 companies its analysts track are holding more than $55-billion in cash.

But few of them, the bank said, are sitting on that money "unproductively."

Story continues below advertisement

The bank said the combined debt of the 327 companies is more than $350-billion, and more than 55 per cent are already returning money to investors. It also noted more than 20 per cent have share buyback programs.

The $526-billion estimate, the bank said, was taken from the Canadian National Balance Sheet Accounts, a Statistics Canada publication.

The bank pointed out the StatsCan figures used "only provides an aggregate measure for the domestic operations of both privately and publicly-owned companies."

"This report cannot be used to analyze the situation of S&P/TSX constituents."

Report an error
As of December 20, 2017, we have temporarily removed commenting from our articles as we switch to a new provider. We are behind schedule, but we are still working hard to bring you a new commenting system as soon as possible. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to