Bank of Canada joins global group to discuss digital currency use
Central banks around the world have been discussing the possibility of digital currencies as the use of cash continues to dwindle in lieu of electronic and online payment systems, according to CTV News.
The Bank of Canada has joined the study group alongside the European Central Bank, the Bank of Japan, the Bank of England, the Swedish Riskbank and the Swiss National Bank.
Middle-class Canadians will save $1.73 a week under the Liberal Government’s new middle-class tax cut, totalling out to $90 dollars a year.
“We are lowering taxes for middle-class families and people working hard to join them, which means more money that can be used to do things like buy healthy food, send kids to camp,” said Middle-Class Prosperity Minister Mona Fortier to the Commons Friday. “This is just the next step in our plan to make life more affordable for middle-class Canadians.”
According to Blacklock’s reporter, parliament passed Bill C-2 that would raise the basic personal exemption for tax filers by roughly $3,000 from $12,298 to $15,000 annually by 2023.
“We know that will have an important impact,” said Finance Minister Bill Morneau. “It’s a very significant measure.”
“The government is trying to get extraordinary credit for what is really a very modest tax cut,” said MP Pat Kelly (Calgary Rocky Ridge), deputy Conservative finance critic to Blacklocks. “It’s a tax cut, and I support cutting taxes for Canadians, but this isn’t going to help Canadians get ahead anywhere near to the extent this government is claiming.”
“The budget resembles marketing documents rather than giving Canadians accurate and clear information about what the government actually plans to do,” said Kelly.
A January cost report found that people earning between $104,000 AND $159,000 will benefit most.
“The Liberals are taking from the poor and giving it to the rich,” said MP Peter Julian. “They have got Robin Hood backwards.”
Fifty percent of Canada’s population is on the verge of insolvency, a recent survey has found.
According to the latest MNP Consumer Debt Index published today, 50 percent of survey respondents answered that they were within $200 of being unable to pay their bills. Forty-nine percent of respondents also said that they didn’t have full confidence “in their ability to cover expenses without going deeper in debt.”
“Our findings may point to a shift among some Canadians from debt apathy to debt hopelessness. Feelings of hopelessness can make people feel like giving up on ever paying down their debt or, worse, ignoring the debt as it piles up higher,” said MNP President Grant Bazian.
Statistics Canada has previously released similar data which also paints a grim picture for Canadians. According to their most recent figures, the seasonally-adjusted credit market debt to disposable income ratio has continued to climb, now to 171.84—this would mean that for every dollar of disposable income, Canadians carry $1.72 of debt.
The Bank of Canada is set to release its next interest rate figure on Wednesday.
The central bank is designing a new $5 note, according to the Bank of Canada governor Stephen Poloz.
Poloz told the Financial Post that public consultations regarding who will appear on the bill will be launching soon.
Sir Wilfrid Laurier is currently on the five. It’s unclear whether Laurier will be knocked off the bill altogether, or whether they will share space on the note with a new Canadian.
Nova Scotia civil rights activist Viola Desmond was eventually selected to be on the $10 note, making her the first woman besides the queen to appear on Canadian currency.
Poloz is asking that the public nominate any iconic Canadians they think are worthy to be on the bill.
As of this morning, Terry Fox and Gord Downie began trending on Twitter, as Canadians quickly rallied behind the two iconic Canucks. Others joked that Don Cherry should appear on the bill.
Personal insolvencies become more common when interest rates rise. In Canada, people are filing for insolvency at a higher rate than usual. According to The Toronto Star, experts are saying that we haven’t had this many instances since the financial crisis in 2008-09.
President of the Canadian Association of Insolvency and Restricting Professionals, Grant Christensen said, “It’s fairly clear what’s going on. There’s a close correlation between interest rates and insolvencies.”
According to his figures, in the first nine months of 2019, 102,023 Canadians had to file for insolvency. This number is the highest it has been in the past ten years.
The Bank of Canada’s standard rate went up from a percentage of 0.5 to 1.75 from July 2017 to October 2018.
Christensen noted, “There’s a two- to three-year lag between a change in interest rates and when it impacts insolvencies. Because rates rose from 2017 to 2018, we’re seeing the impact now. It will probably start to level off some time in mid-2020.”
The senior vice-president of BDO Canada, Adré Bolduc said that if the Bank of Canada were to raise their interest rates again the number of insolvencies would most likely raise along with them.
Bolduc noted, “If a household is living paycheque to paycheque and there’s a significant rise in interest rates, more of them will be pushed over the edge.” According to BDO, the number of Canadians living paycheque to paycheque is 50 percent.
He also noted, “People aren’t saving. They don’t have any savings. So when there’s a crisis, they put it on credit, and they end up getting into trouble.”
“They usually understand what’s caused the problems. But nobody plans to lose their job, or to get divorced.”
Bolduc also thinks that a higher number of self employed Canadians is a contributing factor in the growing amount of insolvencies.
Bolduc told The Star, “There are more and more self-employed people. And they might not realize all the deductions they need to make, and they can run into problems that way.”
A Western University professor at the Ivey School of Business, Mattew Sooy believes that homes with a lower income are more at risk when higher interest rates come along.
Sooy noted, “In the lowest quintile, it’s more like 400 percent. So if interest rates go up by two percentage points, that’s 8 percent of your household income just on extra interest. It’s expensive to be poor.”
Benjamin Tal and Avery Shenfeld are economists for CIBC and they believe that raising the rates would be a bad idea.
They wrote, “If raising the overnight rate to only 1.75 percent could set off a climb in insolvencies, before any major job losses have been seen, it’s clear that taking rates to anywhere near what was historically neutral, or even where some models might currently put neutral, could prove to be overkill.”
According to the Bank of Canada 3.25 percent could be the “neutral” rate in Canada’s economy. They suggested the high number in April of 2019. Tal and Shenfeld added that high insolvency numbers may not be as bad as they sound because not everyone who files for insolvency also declares bankruptcy. Some people who file for bankruptcy do it multiple times and that is also a rising issue.