Bank of Canada 2023 Financial Statements

Summary#

The Canada Gazette published the audited annual financial statements of the Bank of Canada for the year ended December 31, 2023. The statements, audited by Ernst & Young LLP and KPMG LLP and approved on February 22, 2024, show a net loss of $5,652 million and a comprehensive loss of $5,749 million, producing an accumulated deficit of $6,738 million.

What it does#

• Publishes the Bank’s full, audited financial statements prepared under International Financial Reporting Standards (IFRS).
• Reports the Bank’s overall position at year‑end:
  • Total assets: $316,776 million.
  • Investment portfolio: $292,341 million.
  • Bank notes in circulation: $119,430 million.
  • Deposits (Government and other): $196,212 million.
  • Reported deficiency (negative equity): $(5,846) million.
• Shows the Bank’s 2023 operating and market results:
  • Net interest expense of $(4,976) million (main driver of the loss).
  • Operating expenses of $690 million.
  • An indemnity-style derivative asset tied to government-backed bond purchases of $23,406 million (these agreements reflect the Government of Canada’s indemnity for certain program losses and gains).
• Describes pension and staff-related items:
  • Pension plan assets: $2,345 million; defined‑benefit obligation: $2,044 million.
  • Regulations prevented the Bank from making further pension plan contributions after May 2023; employer SPA contributions are expected to be about $7 million in 2024.
• Explains the remittance rules that affect transfers to government:
  • Under the Budget Implementation Act, 2023, No. 1, the Bank must apply any ascertained surplus to reduce its accumulated deficit until the deficit is cleared or the applied surplus equals losses from the Government of Canada Bond Purchase Program. This changes how and when surplus would be paid to the Receiver General.

Who's affected#

• Government of Canada — the Minister of Finance is the Bank’s registered shareholder and the Receiver General is the usual recipient of Bank surpluses; remittances are affected by the rules above.
• Members of Payments Canada, banks and other financial institutions that use the Bank’s deposit and settlement services — their deposit balances and the Bank’s liquidity operations appear on the statements.
• Employees of the Bank of Canada who are members of the Bank of Canada Pension Plan — the statements include details on plan funding, asset mix and contribution rules.
• People who watch public finances and monetary policy — analysts, journalists and ordinary taxpayers who track central‑bank finances, remittances to the government and the impact of past asset‑purchase programs.
• Ordinary cash users are indirectly affected only in that the Bank reports the size of bank notes in circulation ($119,430 million), but day‑to‑day use of money is unchanged by the publication itself.

Why it matters#

• The Bank recorded large losses in 2022–2023 tied to its bond holdings and interest‑rate movements. That reduced its equity and created an accumulated deficit ($6,738 million) that changes how surpluses are handled under recent legislation.
• Because of the indemnity arrangements with the Government of Canada, realized losses from some Bank bond‑purchase programs are covered by the government; realized gains are remitted to the government. The statements make those arrangements and their current values visible (derivative asset $23,406 million).
• The Budget Implementation Act rule means the Bank will not remit surplus to the Receiver General until the specified conditions are met. That can affect the timing and size of transfers from the central bank to the federal treasury.
• Pension funding and contribution rules matter for Bank employees and for how the Bank manages its long‑term liabilities; the report shows the current funded position and notes the temporary pause on employer pension contributions.
• Overall, the statements give a public, audited snapshot of the central bank’s health, the financial consequences of past policy‑era bond purchases, and the near‑term implications for remittances to government.