The Council of Canadians Kelowna chapter hosted a talk by author-activist Joyce Nelson on neo-liberalism and Bank of Canada reform, October 5, 2017.
Numerous Council of Canadians chapters have called for Bank of Canada reform.
Now Hamish Stewart has written this article in the National Observer that notes, “The themes raised at a Nov. 28 to 29 meeting [hosted by the Dutch central bank and a Swiss economic policy think tank] represent a great opportunity for the Bank of Canada and our financial market regulators to consider how Canadian financial sector giants are preparing for a clean energy future.”
Stewart adds, “While Canadian bank lending to fossil fuel companies and heavy investments by our largest pension funds into coal projects and fracking companies get lots of attention, the important signaling role played by the Bank of Canada and our national financial regulators deserves more attention.”
He then highlights, “Sitting alongside the Bank of Canada, the Office of the Superintendent of Financial Institutions (OSFI) supervises all of the largest banks, insurance companies, and pension funds. …Monetary policymakers and regulators like OSFI could work to ensure that companies sitting at the pinnacle of our financial system are operating in a manner that will ensure an orderly economic transition for all Canadians.”
Stewart then asks a series of key questions that the Bank and regulators should be asking:
1- What might happen to balance sheets if mortgage loan collateral (houses and property) are destroyed by increasingly severe flooding in Canadian cities?
2- Would the permanent decline of the oil sands sector lead to knock-on defaults in the mortgage and auto loan portfolios at the Big Six banks?
3- How will cheap renewable energy and the phaseout of over $3 billion in annual government subsidies to the fossil fuel sector augment financial risks to the sector?
4- How are banks reporting on climate risk scenario analysis to their investors, and do these reports reflect international best practice?
5- What happens if fossil fuel companies have to bear more of the closure and remediation costs for abandoned mining and well sites?
Just this past October, the Canadian Press reported, “In her autumn annual reports, [Canada’s environment commissioner] Julie Gelfand asked whether [the federal government] will be able to protect more than $66 billion in federal assets like bridges, roads and airports, while also continuing to provide services, when fires, floods and extreme storms hit hard. The answer, she said, is a resounding ‘No.'”
In terms of further background, CBC has explained, “The Bank of Canada was set up in 1935 in the wake of the Great Depression to provide a means for settling international accounts and to provide interest-free loans to government to finance infrastructure investments. The central bank underwrote Canada’s Second World War effort as well as the building of hospitals and universities.”
But as the article notes, “In 1974, the central bank stopped providing interest-free loans to government so it could join the Bank for International Settlements (BIS), a kind of central bank of central banks.” The Toronto Star has reported, “Headquartered in Switzerland, the BIS is an organization that brings together the central banks from 60 countries to co-operate in the promotion of international monetary and financial stability.”
Author Murray Dobbin has commented, “After nearly 40 years of this incredibly productive use of publicly created credit, unprecedented economic growth and increasing income equality, international finance got its chance to launch the free market counter-revolution against democratic governance. The effect of the change was to effectively take a powerful economic tool out of the hands of democratic governments.”
This is at the heart of the concerns being expressed by a number of Council of Canadians chapters.
The Council of Canadians calls for Bank of Canada policies that serve the public interest, including policies that serve the imperative of climate justice.