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Implications of New Accounting Standards for the Bank of Canada's Balance Sheet

Author

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  • Grahame Johnson
  • Mark Zelmer

Abstract

The Canadian Institute of Chartered Accountants (CICA) has implemented new accounting standards for the valuation and reporting of financial instruments. They are effective for the Bank of Canada in 2007. As a result of these changes, the Bank has begun valuing its holdings of Government of Canada treasury bills on a fair value basis and is carrying any unrealized valuation gains or losses on these investments in a new account (Accumulated Other Comprehensive Income) that forms part of its capital base. The Bank's capital base is likely to experience some volatility over time as the treasury bill portfolio records unrealized valuation gains or losses in response to movements in short-term interest rates. The Bank of Canada Act has been amended to allow the Bank's Board of Directors the right to establish a new special reserve fund that will form part of the Bank's capital base.

Suggested Citation

  • Grahame Johnson & Mark Zelmer, 2007. "Implications of New Accounting Standards for the Bank of Canada's Balance Sheet," Discussion Papers 07-2, Bank of Canada.
    • Handle: RePEc:bca:bocadp:07-2
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    File URL: https://www.bankofcanada.ca/wp-content/uploads/2010/01/dp07-2-e.pdf
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    Citations

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    Cited by:

    1. Mr. Peter Stella & Mr. Ulrich H Klueh, 2008. "Central Bank Financial Strength and Policy Performance: An Econometric Evaluation," IMF Working Papers 2008/176, International Monetary Fund.
    2. Peter Howells, 2009. "Independent Central Banks: Some theoretical and empirical problems?," Working Papers 0908, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.

    More about this item

    Keywords

    Monetary policy framework; Financial institutions;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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