Conservative leadership candidate Pierre Poilievre says he would oppose a public digital currency backed by the Bank of Canada and would increase parliamentary oversight of the central bank.
Mr. Poilievre has been highly critical of the Bank of Canada, accusing it of acting as an ATM for the federal government during the COVID-19 pandemic through the central bank’s government bond buying program, also known as quantitative easing (QE). He has also mocked the institution for incorrect inflation forecasts over the past two years, and recently called it “financially illiterate.”
In a news conference Thursday outside the Bank of Canada building in Ottawa, the Conservative MP doubled down on his criticism, saying he would empower the Auditor General to scrutinize the central bank’s balance sheet and transactions. Former party leader Andrew Scheer proposed this idea in a private member’s bill in February.
“It is the job of elected officials to hold powerful people to account. When powerful people do damage to everyday citizens with their policies, it is our job, as elected officials, to call them out for it,” Mr. Poilievre said, when asked by a journalist whether his continuing criticism risks eroding trust in the central bank.
Mr. Poilievre’s rivals for the Conservative Party leadership were quick to condemn his comments. Jean Charest, a former Quebec premier, called them “irresponsible” and unbecoming a candidate for the office of prime minister.
“Calling [the Bank of Canada’s] leadership ‘financially illiterate’ as Mr. Poilievre has done recently on Twitter and suggesting that politicians should direct monetary policy is extremely alarming,” Mr. Charest said in a statement.
“These are the kinds of things that cause financial crises in other countries, and for someone who says they’re running for prime minister to make those types of comments is irresponsible,” he said.
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Brampton, Ont., Mayor Patrick Brown, who is also seeking the leadership, called Mr. Poilievre’s economic ideas “dangerous” and damaging to Conservative Party election prospects, while also criticizing Mr. Poilievre’s vocal support for cryptocurrencies such as bitcoin.
“Pierre Poilievre doesn’t care if Canadians lose everything because he told them to gamble everything on volatile things like cryptocurrencies on the advice of his YouTube advisers, so long as he gets to promote cheap catchphrases and attract the social media attention he craves,” Mr. Brown said in a statement.
The Bank of Canada is considering launching a kind of digital dollar that could be used in online transactions. The project is still in the development stage, and the decision on whether or not to launch a central bank digital currency (CBDC) rests with the Minister of Finance.
Central banks around the world are considering CBDCs as the use of physical cash – the principal form of public money provided by a central bank – declines and online payments increase. Central banks are concerned they could lose their place at the centre of the payments system, which could undermine financial stability and their ability to conduct monetary policy.
Mr. Poilievre said Thursday he would oppose a CBDC, arguing it would give the government more power to surveil people’s spending, and public digital currencies would compete with commercial bank deposits.
“A central bank digital currency would mean that Canadians would have their money deposited with the government rather than with a private financial institution, and that the central bank would then be in direct competition with commercial banks,” Mr. Poilievre said.
The Bank of Canada has said any CBDC design would likely involve considerable collaboration with the private sector, and the protection of privacy would be paramount. But Mr. Poilievre’s criticism does point to an important consideration for any potential CBDC: whether people might shift their deposits from commercial banks to accounts at the central bank.
Commercial banks rely on deposits to make loans, and so a widespread move away from commercial bank accounts could interfere with credit creation in the economy.
There have been a number of CBDC design suggestions aimed at limiting this potential problem. Policy makers could cap the amount of central bank digital money an individual could hold at a given time, which would essentially treat CBDCs like petty cash for everyday transactions, rather than a place to store savings.
Likewise, if a CBDC did not pay interest, commercial bank accounts that do pay interest might retain their appeal as places to store savings.
When asked about Mr. Poilievre’s comments, Bank of Canada spokesperson Raewyn Passmore said the decision on whether to issue a CBDC rests with Parliament.
“Questions about the Auditor General’s role in regards to the Bank are also for parliamentarians to decide,” she said, noting the central bank is already audited by two private sector accounting firms – KPMG and Ernst & Young – and the Auditor General also has the authority to audit the bank in its role as fiscal agent to the government.
Mr. Poilievre was asked on Thursday whether his criticism of the central bank indicated he would seek to replace Governor Tiff Macklem. He did not respond directly, but said “we’re going to change the leadership of the Government of Canada.”
The Ottawa-area MP has made monetary issues a major part of his bid to secure the party leadership, notably promising to make Canada the “blockchain and cryptocurrency capital of the world.” He has said cryptocurrencies such as bitcoin offer Canadians a chance to “opt out” of inflation.
The Bank of Canada’s senior deputy governor, Carolyn Rogers, took issue with this idea at an appearance before the House of Commons Finance Committee on Monday.
“The volatility of cryptocurrencies, if you look at over the last year or two, have been higher than gasoline, higher than the Canadian exchange rate, higher than most commodities. So we don’t see cryptocurrencies as a way for Canadians to opt out of inflation or as a stable source of value,” she said.
Mr. Poilievre, a long-time MP and the former official opposition finance critic, is one of several candidates seeking the leadership of the federal Tories. The party is to announce a new leader on Sept. 10, chosen by party members through mail-in ballots.
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