Unaudited Quarterly Financial Report 2020.pdf

The Bank of Canada's mandate is to promote the economic and financial welfare of Canada. The Bank's activities and operations are undertaken in support of this mandate and not with the objective of generating revenue or profit. The Bank is committed to keeping Canadians informed about its policies, activities, and operations. This discussion has been prepared in accordance with section 131.1 of the Financial Administration Act and follows the guidance outlined in the Standard on Quarterly Financial Reports for Crown Corporations issued by the Treasury Board of Canada Secretariat. Bank Management is responsible for the preparation of this report, which was approved by the Audit and Finance Committee of the Board of Directors on August 18, 2020. This Quarterly Financial Report should be read in conjunction with the condensed interim financial statements included in this report and with the Bank's Annual Report for 2019. The Annual Report includes a Management Discussion and Analysis (MD&A) for the year ended December 31, 2019. Disclosures and information in the 2019 Annual Report and the MD&A apply to the current quarter unless otherwise updated in this quarterly report.

During the second quarter of 2020, the Bank acted in several ways to support the economy and financial system. The Bank expanded on the measures that were introduced during the first quarter and remains ready to take any and all actions it can to protect the economic and financial well-being of Canadians during this difficult time. The Bank is intervening to support key financial markets to ensure they continue functioning properly. Because key financial markets have become strained since the start of the pandemic, the Bank has introduced several programs to increase liquidity in core funding markets. In addition to the Canada Mortgage Bond Purchase Program (CMBP), the Provincial Money Market Purchase Program (PMMP) and the Bankers' Acceptance Purchase Facility (BAPF), which were introduced in the first quarter of 2020, the Bank deployed the following measures during the second quarter of 2020:

The Commercial Paper Purchase Program (CPPP) was established to support the flow of credit to the economy by alleviating strains in Canada's commercial paper markets, a key source of short-term financing to support ongoing needs of a wide range of firms and public authorities.
The Corporate Bond Purchase Program (CBPP) was introduced to support the liquidity and proper functioning of the corporate debt market.
The Provincial Bond Purchase Program (PBPP) supplements the Provincial Money Market Purchase Program that was introduced in the first quarter of 2020. The aim of both these programs is to maintain well-functioning provincial funding markets.
The Government of Canada Bond Purchase Program (GBPP) was established to address strains in the Government of Canada bond market (including the real-return bond market) and to enhance the effectiveness of other actions the Bank has taken to support core funding markets. More recently, as market conditions improved, the focus of the GBPP has shifted to supporting the resumption of growth in output and employment.

These interventions increase the size of the Bank's balance sheet as they involve acquiring financial assets. In addition to the Standing Term Liquidity Facility (STLF) and the expansion of the duration of SPRAs, which were introduced in the first quarter of 2020, the Bank introduced the Contingent Term Repo Facility (CTRF) during the second quarter of 2020. The CTRF is the Bank of Canada's standing repo facility to counter any severe market-wide liquidity stresses and support the stability of the Canadian financial system.

The Bank's holdings of financial assets are typically driven by its role as the exclusive issuer of Canadian bank notes, where issuing bank notes creates a liability for the Bank. However, changes to the Bank's balance sheet during the first six months of 2020 were primarily driven by the Bank's interventions in the financial markets to support the economy and financial system. The Bank's balance sheet expanded significantly during the second quarter of 2020, primarily due to the acquisition of financial assets under the various programs introduced to support key financial markets.