Canada Gazette, Part I, Volume 154, Number 19: GOVERNMENT NOTICES

May 9, 2020

DEPARTMENT OF CITIZENSHIP AND IMMIGRATION

IMMIGRATION AND REFUGEE PROTECTION ACT

Ministerial Instructions Amending the Ministerial Instructions Respecting the Agri-food Immigration Class (Subparagraph 2(3)(c)(v))

The Minister of Citizenship and Immigration, pursuant to section 14.1^{footnote a} of the Immigration and Refugee Protection Act^{footnote b}, gives the annexed Ministerial Instructions Amending the Ministerial Instructions Respecting the Agri-food Immigration Class (Subparagraph 2(3)(c)(v)).

Ottawa, April 30, 2020

Marco E. L. Mendicino
Minister of Citizenship and Immigration

Ministerial Instructions Amending the Ministerial Instructions Respecting the Agri-food Immigration Class (Subparagraph 2(3)(c)(v))

Amendment

1 Subparagraph 2(3)(c)(v) of the Ministerial Instructions Respecting the Agri-food Immigration Class^{footnote 1} is replaced by the following:

(v) it provides for the occupation indicated, a wage that is
- (A) determined as per the provisions of the applicable collective agreement,
- (B) if there is no collective agreement, at or above the prevailing wage — as identified by the Job Bank of the Canada Employment Insurance Commission — in the province where the employment is offered,
- (C) if there is no collective agreement and no prevailing wage identified in that province, at or above the national prevailing wage, and

Taking Effect

2 These Instructions take effect on the day on which they are given.

DEPARTMENT OF CITIZENSHIP AND IMMIGRATION

IMMIGRATION AND REFUGEE PROTECTION ACT

Ministerial Instructions Amending the Ministerial Instructions Respecting the Home Child Care Provider Class and the Ministerial Instructions Respecting the Home Support Worker Class

The Minister of Citizenship and Immigration, pursuant to section 14.1^{footnote a} of the Immigration and Refugee Protection Act^{footnote b}, gives the annexed Ministerial Instructions Amending the Ministerial Instructions Respecting the Home Child Care Provider Class and the Ministerial Instructions Respecting the Home Support Worker Class.

Ottawa, April 29, 2020

Marco E. L. Mendicino
Minister of Citizenship and Immigration

Ministerial Instructions Amending the Ministerial Instructions Respecting the Home Child Care Provider Class and the Ministerial Instructions Respecting the Home Support Worker Class

Amendments

Ministerial Instructions Respecting the Home Child Care Provider Class

1 Section 3 of the Ministerial Instructions Respecting the Home Child Care Provider Class^{footnote 2} is replaced by the following:

Processing fees

3 (1) The following fees are payable for processing an application for a permanent resident visa under these Instructions:

(a) in respect of a principal applicant, $550;
(b) in respect of a family member of the principal applicant who is a spouse or common-law partner, $550; and
(c) in respect of a family member of the principal applicant who is a dependent child, $150.

Indexation

(2) The fees set out in subsection (1) must be indexed at 09:00:00 a.m. Eastern daylight time on April 30, 2022, and every two years after that on April 30 at that same time, in accordance with the cumulative percentage increase to the Consumer Price Index for Canada, published by Statistics Canada, for the two previous years, rounded to the nearest five dollars.

Ministerial Instructions Respecting the Home Support Worker Class

2 Section 3 of the Ministerial Instructions Respecting the Home Support Worker Class^{footnote 2} is replaced by the following:

Processing fees

3 (1) The following fees are payable for processing an application for a permanent resident visa under these Instructions:

(a) in respect of a principal applicant, $550;
(b) in respect of a family member of the principal applicant who is a spouse or common-law partner, $550; and
(c) in respect of a family member of the principal applicant who is a dependent child, $150.

Indexation

Taking effect

3 These Instructions take effect at 09:00:00 a.m. Eastern daylight time on April 30, 2020.

DEPARTMENT OF CITIZENSHIP AND IMMIGRATION

IMMIGRATION AND REFUGEE PROTECTION ACT

Ministerial Instructions with respect to the processing of certain new and existing applications for temporary residence to further support Government-wide measures to limit the spread of COVID-19 (Coronavirus)

These Instructions are published in the Canada Gazette, in accordance with subsection 87.3(6) of the Immigration and Refugee Protection Act.

These Instructions are given, pursuant to section 87.3 and subsections 92(1.1) and (2), by the Minister of Citizenship and Immigration as, in the opinion of the Minister, these Instructions will best support the attainment of the immigration goals established by the Government of Canada over the next 21 days.

These Instructions are consistent with the Immigration and Refugee Protection Act objectives, as laid out in section 3, and are compliant with the Canadian Charter of Rights and Freedoms.

Authority for these Ministerial Instructions is pursuant to section 87.3 of the Immigration and Refugee Protection Act. Instructions are directed to officers who are charged with handling and/or reviewing certain applications for temporary residence.

Considerations

Recognizing the declaration by the World Health Organization regarding the pandemic of COVID-19 (Coronavirus);
Recognizing also that the increased spread of the disease would pose an imminent and severe risk to public health in Canada;
Recognizing also that the entry of persons into Canada who have been in a foreign country may contribute to the spread of the disease in Canada;
Recognizing how the related response measures have reduced Immigration, Refugee and Citizenship Canada’s capacity for processing applications, both in Canada and overseas;
Noting that Canada’s immigration objectives, as laid out in section 3 of the Immigration and Refugee Protection Act, include the protection of the health and safety of Canadians; and

Recognizing that in order to meet the objective of protecting the health and safety of Canadians, these Instructions are to operate consistently with two emergency orders under the Quarantine Act: Minimizing the Risk of Exposure to COVID-19 in Canada Order (Prohibition of Entry into Canada from any Country other than the United States), and Minimizing the Risk of Exposure to COVID-19 in Canada Order (Prohibition of Entry into Canada from the United States), as well as the Interim Order to Prevent Certain Persons from Boarding Flights to Canada due to COVID-19, made pursuant to the Aeronautics Act. These Orders restrict travel to and entry into Canada.

To view the language of the emergency orders issued under the Quarantine Act, including details regarding foreign nationals whose entry into Canada is not prohibited by these orders, please consult the Orders in Council online database. For the text of the Interim Order issued under the Aeronautics Act, please consult the webpage on the COVID-19 measures, updates, and guidance issued by Transport Canada.

This information is also published in the Canada Gazette.

Scope

These Instructions apply for the period of 21 calendar days following the day they come into force.

These Instructions apply to certain applications for temporary resident visas, work permits, study permits, and electronic travel authorizations (eTAs) received by Immigration, Refugees and Citizenship Canada before the coming into force of these Instructions, and in respect of which a final decision has not been made, and to certain new applications received by Immigration, Refugees and Citizenship Canada on or after the coming into force of these Instructions.

Any categories for which Instructions are not specifically issued shall continue to be processed.

Applications submitted from outside Canada to be submitted by electronic means — Temporary residence

All applications for a temporary resident visa (including a transit visa), a work permit, or a study permit submitted by persons who are outside Canada at the time of application must be submitted using electronic means (apply online).

Temporary suspension on processing of certain applications for temporary resident visas and electronic travel authorizations for visitors

Applications for temporary resident visas for visitors that were received before the coming into force of these Instructions and in respect of which a final decision has not been made, and those that are received on or after the coming into force of the Instructions, will not be processed while these Instructions are in effect, unless they pertain to foreign nationals who are not prohibited from entering Canada or from boarding an aircraft for a flight to Canada, per the Emergency Orders under the Quarantine Act, and the Interim Order under the Aeronautics Act, referenced above.

Any eTA applications that require processing by any means other than the electronic automated system will not be processed while these Instructions are in effect, unless they pertain to foreign nationals who are not prohibited from entering Canada or from boarding an aircraft for a flight to Canada, per the Emergency Orders under the Quarantine Act, and the Interim Order under the Aeronautics Act, referenced above.

Retention/Disposition

Applications received prior to the coming into force of the Instructions, and in respect of which a final decision has not been made, and those that are received on or after the coming into force, will be retained and processing fees shall not be returned, as these Instructions are temporary in nature.

Repeal

The following Instructions are repealed, effective April 29, 2020:

Ministerial Instructions with respect to the processing of certain new and existing applications for temporary residence to further support Government-wide measures to limit the spread of COVID-19 (Coronavirus), entered into force on April 9, 2020.

Effective period

These Instructions have effect for a period of 21 days beginning on April 29, 2020.

Ottawa, April 28, 2020

Marco E. L. Mendicino, P.C., M.P.
Minister of Citizenship and Immigration

DEPARTMENT OF TRANSPORT

CANADA SHIPPING ACT, 2001

Interim Order for the Protection of North Atlantic Right Whales (Eubalaena glacialis) in the Gulf of St. Lawrence

Whereas the Minister of Transport believes that the annexed Interim Order for the Protection of North Atlantic Right Whales (Eubalaena glacialis) in the Gulf of St. Lawrence is required to deal with a direct or indirect risk to marine safety or to the marine environment;

And whereas the provisions of the annexed Interim Order may be contained in a regulation made pursuant to paragraphs 35.1(1)(k)^{footnote c} and 136(1)(f)^{footnote d} of the Canada Shipping Act, 2001^{footnote e};

Therefore, the Minister of Transport, pursuant to subsection 10.1(1)^{footnote f} of the Canada Shipping Act, 2001^{footnote e}, makes the annexed Interim Order for the Protection of North Atlantic Right Whales (Eubalaena glacialis) in the Gulf of St. Lawrence.

Ottawa, April 27, 2020

Marc Garneau
Minister of Transport

Interim Order for the Protection of North Atlantic Right Whales (Eubalaena glacialis) in the Gulf of St. Lawrence

Definitions

Definitions

1 The following definitions apply in this Interim Order.

dynamic shipping zone means a zone described in Part 2 of the schedule. (zone de transport maritime dynamique)
navigational warning means a communication identified as a navigational warning, or NAVWARN, that the Canadian Coast Guard publishes online or broadcasts. (avertissement de navigation)
notice to fish harvesters means a communication identified as a notice to fish harvesters that the Department of Fisheries and Oceans publishes online. (avis aux pêcheurs)
right whale means a North Atlantic right whale (Eubalaena glacialis). (baleine noire)
seasonal management area means an area described in Part 3 of the schedule. (zone de gestion saisonnière)
static zone means a zone described in Part 1 of the schedule. (zone statique)

Application

Vessels

2 (1) This Interim Order applies to vessels that are more than 13 m in length.

Length

(2) For the purposes of subsection (1), length means the distance measured from the forward end of the foremost outside surface of the hull shell to the aft end of the aftermost outside surface of the hull shell.

Static Zones

Speed limit

3 Beginning on April 28, 2020, a vessel must not proceed at a speed in excess of 10 knots over ground within a static zone.

Exclusion — lobster fishing and ice clearing

4 (1) Subject to subsections (2) and (3), the following vessels are not subject to the speed limit set out in section 3:

(a) vessels engaged in lobster fishing in waters that are not more than 36.57 m deep; and
(b) air cushion vessels operated by the Government of Canada that are engaged in ice-clearing activities.

Exception — right whale detection

(2) If a notice to fish harvesters states that at least one right whale has been detected within a static zone in waters that are not more than 36.57 m deep, the speed limit set out in section 3 applies to the vessels described in paragraph (1)(a) for 15 days after the day on which the notice comes into effect.

Extension

(3) If a new notice to fish harvesters with the same statement is published or broadcast during the 15-day period, the speed limit continues to apply for a further 15 days after the day on which the new notice comes into effect.

Dynamic Shipping Zones

Speed limit — right whale detection

5 (1) If a navigational warning states that at least one right whale has been detected in or near a dynamic shipping zone, a vessel must not proceed at a speed in excess of 10 knots over ground within that zone as of the time that the navigational warning comes into effect.

Duration

(2) The speed limit ceases to apply on the 15th day after the day on which the navigational warning comes into effect.

Extension

(3) If a new navigational warning with the same statement is published or broadcast in respect of the same dynamic shipping zone during the 15-day period, the speed limit continues to apply in that zone for a further period of 15 days after the day on which the new navigational warning comes into effect.

Speed limit — detection activities

6 (1) If a navigational warning states that the Government of Canada was unable for a period of at least seven days to conduct right whale detection activities or to have those activities conducted on its behalf, in respect of a dynamic shipping zone or the waters near that zone, a vessel must not proceed at a speed in excess of 10 knots over ground within that zone as of the time that the navigational warning comes into effect.

Duration

(2) The speed limit ceases to apply as of the time that a new navigational warning that states that the speed limit no longer applies because the whale detection activities have resumed comes into effect.

Seasonal Management Areas

Speed limit — beginning of season

7 During the period beginning on April 28, 2020 and ending on June 30, 2020, a vessel must not proceed at a speed in excess of 10 knots over ground within a seasonal management area.

Speed limit — end of season

8 (1) Beginning on July 1, 2020, if a navigational warning states that at least one right whale has been detected within a seasonal management area, a vessel must not proceed at a speed in excess of 10 knots over ground within that area as of the time that the navigational warning comes into effect.

Duration

(2) The speed limit ceases to apply on the 15th day after the day on which the navigational warning comes into effect.

Extension

(3) If a new navigational warning with the same statement is published or broadcast in respect of the same seasonal management area within the 15-day period, the speed limit continues to apply in that area for a further period of 15 days after the day on which the new navigational warning comes into effect.

General Speed Limit

Speed limit — death or injury

9 (1) If a navigational warning states that the Government of Canada has received a report of the death or injury of at least one right whale within the Gulf of St. Lawrence, a vessel must not, as of the time that the navigational warning comes into effect, proceed at a speed in excess of 10 knots over ground within:

(a) any dynamic shipping zone identified in the navigational warning; or
(b) beginning on July 1, 2020, any seasonal management area identified in the navigational warning.

Duration

(2) The speed limit ceases to apply on the 15th day after the day on which the navigational warning comes into effect.

Extension

(3) If a new navigational warning with the same statement is published or broadcast in respect of the same dynamic shipping zone or seasonal management area within the 15-day period, the speed limit continues to apply in that zone or area for a further period of 15 days after the day on which the new navigational warning comes into effect.

Exception for Weather Conditions

Suspension — weather conditions

10 (1) If a navigational warning states that, because of current or forecast weather conditions, a speed limit under section 3, subsection 5(1) or 6(1), section 7 or subsection 8(1) or 9(1) is suspended for an area or zone specified in the navigational warning, a vessel may proceed at a safe speed that is in excess of 10 knots over ground within that area or zone as of the time that the navigational warning comes into effect.

Duration

(2) The suspension applies until the first of the following events occurs:

(a) a new navigational warning that states that the navigational warning referred to in subsection (1) has ceased to have effect because current or forecast weather conditions have improved comes into effect, or
(b) 96 hours have passed since the navigational warning referred to in subsection (1) came into effect.

Clarification

(3) For greater certainty, the suspension does not extend the duration of a speed limit.

Repeal

11 This Interim Order is repealed on November 15, 2020.

SCHEDULE

(Section 1)

Zones and Areas

PART 1

Static Zones

Northern Static Zone

The northern static zone is the area bounded by a line

(a) starting at 50°20′N, 65°00′W;
(b) from there to 49°13′N, 65°00′W;
(c) from there to 48°40′N, 64°13′W;
(d) from there to 48°40′N, 62°40′W;
(e) from there to 48°03′N, 61°07.5′W;
(f) from there to 47°58.1′N, 61°03.5′W;
(g) from there to 48°00′N, 61°00′W;
(h) from there to 49°04′N, 61°00′W;
(i) from there to 49°04′N, 62°00′W;
(j) from there to 49°43′N, 63°00′W;
(k) from there to 50°20′N, 63°00′W; and
(l) from there to 50°20′N, 65°00′W.

Southern Static Zone

The southern static zone is the area bounded by a line

(a) starting at 48°40′N, 65°00′W;
(b) from there to 48°40′N, 62°40′W;
(c) from there to 48°03′N, 61°07.5′W;
(d) from there to 47°58.1′N, 61°03.5′W;
(e) from there to 47°10′N, 62°30′W;
(f) from there to 47°10′N, 65°00′W; and
(g) from there to 48°40′N, 65°00′W.

PART 2

Dynamic Shipping Zones

Dynamic Shipping Zone A

Dynamic shipping zone A is the area bounded by a line

(a) starting at 49°41′N, 65°00′W;
(b) from there to 49°20′N, 65°00′W;
(c) from there to 49°11′N, 64°00′W;
(d) from there to 49°22′N, 64°00′W; and
(e) from there to 49°41′N, 65°00′W.

Dynamic Shipping Zone B

Dynamic shipping zone B is the area bounded by a line

(a) starting at 49°22′N, 64°00′W;
(b) from there to 49°11′N, 64°00′W;
(c) from there to 48°48′N, 63°00′W;
(d) from there to 49°00′N, 63°00′W; and
(e) from there to 49°22′N, 64°00′W.

Dynamic Shipping Zone C

Dynamic shipping zone C is the area bounded by a line

(a) starting at 49°00′N, 63°00′W;
(b) from there to 48°48′N, 63°00′W;
(c) from there to 48°24′N, 62°00′W;
(d) from there to 48°35′N, 62°00′W; and
(e) from there to 49°00′N, 63°00′W.

Dynamic Shipping Zone D

Dynamic shipping zone D is the area bounded by a line

(a) starting at 50°16′N, 64°00′W;
(b) from there to 50°00′N, 64°00′W;
(c) from there to 49°56′N, 63°00′W;
(d) from there to 50°16′N, 63°00′W; and
(e) from there along the coastline back to 50°16′N, 64°00′W.

Dynamic Shipping Zone E

Dynamic shipping zone E is the area bounded by a line

(a) starting at 48°35′N, 62°00′W;
(b) from there to 48°24′N, 62°00′W;
(c) from there to 48°03′N, 61°07.5′W;
(d) from there to 47°58.1′N, 61°03.5′W;
(e) from there to 48°00′N, 61°00′W;
(f) from there to 48°10.5′N, 61°00′W; and
(g) from there to 48°35′N, 62°00′W.

PART 3

Seasonal Management Areas

Seasonal Management Area 1

Seasonal management area 1 is the area bounded by a line

(a) starting at 49°04′N, 62°00′W;
(b) from there to 49°04′N, 61°00′W;
(c) from there to 48°10.5′N, 61°00′W;
(d) from there to 48°35′N, 62°00′W; and
(e) from there to 49°04′N, 62°00′W.

Seasonal Management Area 2

Seasonal management area 2 is the area bounded by a line

(a) starting at 48°24′N, 62°00′W;
(b) from there to 48°03′N, 61°07.5′W;
(c) from there to 47°58.1′N, 61°03.5′W;
(d) from there to 47°26.69′N, 62°00′W; and
(e) from there to 48°24′N, 62°00′W.

(Erratum)

DEPARTMENT OF TRANSPORT

MARINE LIABILITY ACT

Ship-source Oil Pollution Fund

Notice is hereby given that the notice bearing the above-mentioned title published in the Canada Gazette, Part I, Vol. 153, No. 15, dated Saturday, April 13, 2019, on page 1452, contained an error. The notice should have read as follows:

Pursuant to section 113^{footnote *} of the Marine Liability Act (the Act) and the Marine Liability and Information Return Regulations made pursuant to paragraph 113(3)(b)^{footnote *} of the Act, the amount of the levy in respect of payments into the Ship-source Oil Pollution Fund required by subsection 114.1(2)^{footnote *} of the Act would be 53.38 cents if the levy were to be imposed or reimposed pursuant to subsection 114(1)^{footnote *} of the Act during the fiscal year commencing April 1, 2019.

Marc Garneau, P.C., M.P.
Minister of Transport

DEPARTMENT OF TRANSPORT

MARINE LIABILITY ACT

Ship-source Oil Pollution Fund

Pursuant to section 113^{footnote *} of the Marine Liability Act (the Act) and the Marine Liability and Information Return Regulations made pursuant to paragraph 113(3)(b)^{footnote *} of the Act, the amount of the levy in respect of payments into the Ship-source Oil Pollution Fund required by subsection 114.1(2)^{footnote *} of the Act would be 54.45 cents if the levy were to be imposed or reimposed pursuant to subsection 114(1)^{footnote *} of the Act during the fiscal year commencing April 1, 2020.

Marc Garneau, P.C., M.P.
Minister of Transport

OFFICE OF THE SUPERINTENDENT OF FINANCIAL INSTITUTIONS

BANK ACT

Schedules I, II and III

Notice is hereby given, pursuant to subsections 14(3) and 14.1(3) of the Bank Act, that Schedules I, II and III, as amended, were as shown below as at December 31, 2019.

SCHEDULE I

(Section 14)

As at December 31, 2019
Name of Bank	Head Office
ADS Canadian Bank	Ontario
B2B Bank	Ontario
Bank of Montreal	Quebec
Bank of Nova Scotia (The)	Nova Scotia
Bridgewater Bank	Alberta
Caisse populaire acadienne ltée	New Brunswick
Canadian Imperial Bank of Commerce	Ontario
Canadian Tire Bank	Ontario
Canadian Western Bank	Alberta
Coast Capital Savings Federal Credit Union	British Columbia
Concentra Bank	Saskatchewan
Continental Bank of Canada	Ontario
CS Alterna Bank	Ontario
DirectCash Bank	Alberta
Duo Bank of Canada	Ontario
Equitable Bank	Ontario
Exchange Bank of Canada	Ontario
First Nations Bank of Canada	Saskatchewan
General Bank of Canada	Alberta
Haventree Bank	Ontario
Home Bank	Ontario
HomeEquity Bank	Ontario
Laurentian Bank of Canada	Quebec
Manulife Bank of Canada	Ontario
Motus Bank	Ontario
National Bank of Canada	Quebec
Peoples Bank of Canada	British Columbia
President’s Choice Bank	Ontario
Rogers Bank	Ontario
Royal Bank of Canada	Quebec
Street Capital Bank of Canada	Ontario
Tangerine Bank	Ontario
Toronto-Dominion Bank (The)	Ontario
Vancity Community Investment Bank	British Columbia
VersaBank	Ontario
Wealth One Bank of Canada	Ontario
Zag Bank	Alberta

SCHEDULE II

(Section 14)

As at December 31, 2019
Name of Bank	Head Office
Amex Bank of Canada	Ontario
Bank of China (Canada)	Ontario
Bank One Canada	Ontario
BofA Canada Bank	Ontario
Cidel Bank Canada	Ontario
Citco Bank Canada	Ontario
Citibank Canada	Ontario
CTBC Bank Corp. (Canada)	British Columbia
Habib Canadian Bank	Ontario
HSBC Bank Canada	British Columbia
ICICI Bank Canada	Ontario
Industrial and Commercial Bank of China (Canada)	Ontario
J.P. Morgan Bank Canada	Ontario
J.P. Morgan Canada	Ontario
KEB Hana Bank Canada	Ontario
Mega International Commercial Bank (Canada)	Ontario
SBI Canada Bank	Ontario
Shinhan Bank Canada	Ontario
Société Générale (Canada)	Quebec
UBS Bank (Canada)	Ontario
Walmart Canada Bank	Ontario

SCHEDULE III

(Section 14.1)

As at December 31, 2019
Name of Authorized Foreign Bank (FB)	Name under which FB is permitted to carry on business in Canada	Type of Foreign Bank Branch (FBB)^{table 1 note *}	Principal Office
Bank of America, National Association	Bank of America, National Association	Full-service	Ontario
Bank of China Limited	Bank of China, Toronto Branch	Full-service	Ontario
Bank of New York Mellon (The)	Bank of New York Mellon (The)	Full-service	Ontario
Barclays Bank PLC	Barclays Bank PLC, Canada Branch	Full-service	Ontario
BNP Paribas	BNP Paribas	Full-service	Quebec
Capital One Bank (USA), N.A.	Capital One Bank (Canada Branch)	Full-service	Ontario
China Construction Bank	China Construction Bank Toronto Branch	Full-service	Ontario
Citibank, N.A.	Citibank, N.A.	Full-service	Ontario
Comerica Bank	Comerica Bank	Full-service	Ontario
Coöperatieve Rabobank U.A.	Rabobank Canada	Full-service	Ontario
Crédit Agricole Corporate and Investment Bank	Crédit Agricole Corporate and Investment Bank (Canada Branch)	Lending	Quebec
Credit Suisse AG	Credit Suisse AG, Toronto Branch	Lending	Ontario
Deutsche Bank AG	Deutsche Bank AG	Full-service	Ontario
Fifth Third Bank, National Association	Fifth Third Bank, National Association	Full-service	Ontario
First Commercial Bank	First Commercial Bank	Full-service	British Columbia
JPMorgan Chase Bank, National Association	JPMorgan Chase Bank, National Association	Full-service	Ontario
M&T Bank	M&T Bank	Full-service	Ontario
Maple Bank GmbH	Maple Bank	Full-service	Ontario
Mega International Commercial Bank Co., Ltd.	Mega International Commercial Bank Co., Ltd.	Full-service	Ontario
Mizuho Bank, Ltd.	Mizuho Bank, Ltd., Canada Branch	Full-service	Ontario
MUFG Bank, Ltd.	MUFG Bank, Ltd., Canada Branch	Full-service	Ontario
Natixis	Natixis Canada Branch	Lending	Quebec
Northern Trust Company (The)	Northern Trust Company, Canada Branch (The)	Full-service	Ontario
PNC Bank, National Association	PNC Bank Canada Branch	Full-service	Ontario
Silicon Valley Bank	Silicon Valley Bank	Lending	Ontario
Société Générale	Société Générale (Canada Branch)	Full-service	Quebec
State Street Bank and Trust Company	State Street	Full-service	Ontario
Sumitomo Mitsui Banking Corporation	Sumitomo Mitsui Banking Corporation, Canada Branch	Full-service	Ontario
U.S. Bank National Association	U.S. Bank National Association	Full-service	Ontario
UBS AG	UBS AG Canada Branch	Full-service	Ontario
United Overseas Bank Limited	United Overseas Bank Limited	Full-service	British Columbia
Wells Fargo Bank, National Association	Wells Fargo Bank, National Association, Canadian Branch	Full-service	Ontario
Table 1 note(s) Table 1 note * An FBB, whose order is subject to the restrictions and requirements referred to in subsection 524(2) of the Bank Act, is referred to as a "lending" branch. Return to table 1 note * referrer

May 4, 2020

Jeremy Rudin
Superintendent of Financial Institutions

BANK OF CANADA

FINANCIAL STATEMENTS DECEMBER 31, 2019

Glossary of abbreviations
BIS	Bank for International Settlements
CPA Canada	Chartered Professional Accountants of Canada
ECL	expected credit loss
FVOCI	fair value through other comprehensive income
FVTPL	fair value through profit or loss
IAS	International Accounting Standard
IASB	International Accounting Standards Board
IFRIC	International Financial Reporting Interpretations Committee
IFRS	International Financial Reporting Standards
ITA	Income Tax Act
LVTS	Large Value Transfer System
OCI	other comprehensive income
PSAS	Public Sector Accounting Standards
Pension Plan	Bank of Canada Pension Plan
SDR	Special Drawing Rights
SIPP	Statement of Investment Policy and Procedures
SPA	Bank of Canada Supplementary Pension Arrangement
SPRAs	securities purchased under resale agreements
SSRAs	securities sold under repurchase agreements

Financial Reporting Responsibility

Management of the Bank of Canada (the Bank) is responsible for the financial statements, which are prepared in accordance with International Financial Reporting Standards. The amounts and financial information included in the statements reflect management’s best estimates and judgment. Financial information presented elsewhere in the Annual Report is consistent with the financial statements.

Management is responsible for the integrity and reliability of the financial statements and the accounting system from which they are derived. The Bank maintains a system of internal controls to provide reasonable assurance that transactions are properly authorized and recognized, that financial information is reliable, that assets are safeguarded and liabilities recognized, and that operations are carried out effectively. The Bank’s internal audit department reviews internal controls, including the application of accounting and financial controls.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal controls and exercises this responsibility through the Audit and Finance Committee (the Committee) of the Board. The Committee is composed of members who are neither officers nor employees of the Bank and who are financially literate. The Committee is therefore qualified to review the Bank’s annual financial statements and to recommend their approval by the Board of Directors. The Committee meets with management, the Chief Internal Auditor and the Bank’s independent auditors, who are appointed by the Governor-in-Council. The Committee has established processes to evaluate the independence of the Bank’s independent auditors and oversees all services provided by them. The Committee has a duty to review the adoption of, and changes in, accounting principles, policies and procedures that have a material effect on the financial statements, and to review and assess key management judgments and estimates material to the reported financial information.

These 2019 financial statements have been audited by the Bank’s independent auditors, PricewaterhouseCoopers LLP and KPMG LLP, and their report is presented herein. The independent auditors have full and unrestricted access to the Committee to discuss their audit and related findings.

Ottawa, Canada, February 20, 2020

Stephen S. Poloz
Governor

Carmen Vierula, CPA, CA
Chief Financial Officer and Chief Accountant

Independent Auditors’ Report

To the Minister of Finance, registered shareholder of the Bank of Canada

Our opinion

We have audited the financial statements of the Bank of Canada (the Bank), which comprise the statement of financial position as at December 31, 2019, and the statement of net income and comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as at December 31, 2019 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report. We are independent of the Bank in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other matter

The financial statements of the Bank for the year ended December 31, 2018 were audited by Ernst & Young LLP and PricewaterhouseCoopers LLP, who expressed an unmodified opinion on those financial statements on February 13, 2019.

Other information

Management is responsible for the other information. The other information comprises the information, other than the financial statements and our auditors’ report thereon, included in the 2019 Annual Report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information, identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Bank’s financial reporting process.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Bank to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Ottawa, Canada, February 20, 2020

PricewaterhouseCoopers LLP

Chartered Professional Accountants
Licensed Public Accountants

KPMG LLP

Chartered Professional Accountants
Licensed Public Accountants

BANK OF CANADA

Statement of financial position

As at December 31 (in millions of Canadian dollars)
Assets
	Note	2019	2018
Cash and foreign deposits	3, 4, 7	6.4	17.0
Loans and receivables	3, 5, 7
Securities purchased under resale agreements		15,516.5	10,673.0
Other receivables		5.4	3.1
		15,521.9	10,676.1
Investments	3, 6, 7
Government of Canada treasury bills		23,367.4	24,217.8
Canada Mortgage Bonds		510.7	251.3
Government of Canada bonds		79,030.5	79,625.4
Other investments		438.3	433.3
		103,346.9	104,527.8
Capital assets	2, 8, 9, 10
Property and equipment		590.6	600.3
Intangible assets		59.4	44.0
Right-of-use leased assets		50.9	n.a.
		700.9	644.3
Other assets	11	66.7	189.7
Total assets		119,642.8	116,054.9
Liabilities and equity
Bank notes in circulation	3, 7, 12	93,094.3	90,193.1
Deposits	3, 7, 13
Government of Canada		21,765.6	21,725.6
Members of Payments Canada		249.5	250.5
Other deposits		3,228.2	2,830.1
		25,243.3	24,806.2
Other liabilities	2, 3, 7, 10, 14	774.9	530.3
Total liabilities		119,112.5	115,529.6
Commitments, contingencies and guarantees	16
Equity	17	530.3	525.3
Total liabilities and equity		119,642.8	116,054.9

Stephen S. Poloz
Governor

Carmen Vierula, CPA, CA
Chief Financial Officer and Chief Accountant

Claire M. C. Kennedy
Lead Director, Board of Directors, and Chair, Audit and Finance Committee

(See accompanying notes to the financial statements.)

BANK OF CANADA

Statement of net income and comprehensive income

For the year ended December 31 (in millions of Canadian dollars)
Income
	Note	2019	2018
Interest revenue
Investments		2,083.4	1,886.9
Securities purchased under resale agreements		191.4	122.6
Other		0.8	0.6
		2,275.6	2,010.1
Interest expense
Deposits		(406.5)	(363.9)
Other		(0.1)	(0.5)
Net interest revenue		1,869.0	1,645.7
Dividend revenue		4.2	4.2
Other revenue		8.0	8.5
Total income		1,881.2	1,658.4
Expenses
Staff costs		285.5	276.1
Bank note research, production and processing		60.9	53.4
Premises costs		32.0	29.6
Technology and telecommunications		72.3	53.9
Depreciation and amortization		54.9	47.1
Other operating expenses		73.9	73.5
Total expenses		579.5	533.6
Net income		1,301.7	1,124.8
Other comprehensive income (loss)
Remeasurements of the net defined-benefit liability/asset	15	(133.4)	91.4
Change in fair value of BIS shares	2, 3	5.0	29.7
Other comprehensive income (loss)		(128.4)	121.1
Comprehensive income		1,173.3	1,245.9

(See accompanying notes to the financial statements.)

Statement of changes in equity

For the year ended December 31 (in millions of Canadian dollars)
Comprehensive income for the year
	Note	Share capital	Statutory reserve	Special reserve	Investment revaluation reserve	Retained earnings	Total
Balance as at January 1, 2019		5.0	25.0	100.0	395.3	-	525.3
Net income		-	-	-	-	1,301.7	1,301.7
Remeasurements of the net defined-benefit liability/asset	15	-	-	-	-	(133.4)	(133.4)
Change in fair value of BIS shares	3	-	-	-	5.0	-	5.0
		-	-	-	5.0	1,168.3	1,173.3
Surplus for the Receiver General for Canada	14, 17	-	-	-	-	(1,168.3)	(1,168.3)
Balance as at December 31, 2019		5.0	25.0	100.0	400.3	-	530.3

Comprehensive income for the year
	Note	Share capital	Statutory reserve	Special reserve	Available-for-sale reserve	Retained earnings	Total
Balance as at January 1, 2018		5.0	25.0	100.0	365.6	-	495.6
Net income		-	-	-	-	1,124.8	1,124.8
Remeasurements of the net defined-benefit liability/asset	15	-	-	-	-	91.4	91.4
Change in fair value of BIS shares	3	-	-	-	29.7	-	29.7
		-	-	-	29.7	1,216.2	1,245.9
Surplus for the Receiver General for Canada	14, 17	-	-	-	-	(1,216.2)	(1,216.2)
Balance as at December 31, 2018		5.0	25.0	100.0	395.3	-	525.3

(See accompanying notes to the financial statements.)

BANK OF CANADA

Statement of cash flows

For the year ended December 31 (in millions of Canadian dollars)
Cash flows from operating activities
	2019	2018
Interest received	2,259.3	1,905.1
Dividends received	4.2	4.2
Other revenue received	7.1	7.3
Interest paid	(406.7)	(365.4)
Payments to or on behalf of employees and to suppliers and to members of Payments Canada	(484.8)	(460.8)
Net increase in deposits	437.1	577.4
Acquisition of securities purchased under resale agreements—overnight repo	(7,399.9)	(24,333.2)
Proceeds from maturity of securities purchased under resale agreements—overnight repo	7,399.9	24,333.2
Proceeds from securities sold under repurchase agreements	1,500.0	11,150.2
Repayments of securities sold under repurchase agreements	(1,500.0)	(11,150.2)
Net cash provided by operating activities	1,816.2	1,667.8
Cash flows from investing activities
Net maturities (purchases) of Government of Canada treasury bills	851.6	(5,753.3)
Purchases of Canada Mortgage Bonds	(262.8)	(251.1)
Purchases of Government of Canada bonds	(14,614.1)	(13,209.0)
Proceeds from maturity of Government of Canada bonds	15,221.0	15,685.0
Acquisition of securities purchased under resale agreements—term repo	(108,283.1)	(87,350.6)
Proceeds from maturity of securities purchased under resale agreements—term repo	103,446.1	86,161.9
Additions of property and equipment	(29.9)	(68.6)
Additions of intangible assets	(26.3)	(13.7)
Net cash used in investing activities	(3,697.5)	(4,799.4)
Cash flows from financing activities
Net increase in bank notes in circulation	2,901.2	4,337.2
Remittance of surplus to the Receiver General for Canada	(1,025.9)	(1,204.2)
Payments on lease liabilities	(4.1)	n.a.
Net cash provided by financing activities	1,871.2	3,133.0
Effect of exchange rate changes on foreign currency	(0.5)	1.0
Increase (decrease) in cash and foreign deposits	(10.6)	2.4
Cash and foreign deposits, beginning of year	17.0	14.6
Cash and foreign deposits, end of year	6.4	17.0

(See accompanying notes to the financial statements.)

Notes to the financial statements of the Bank of Canada

For the year ended December 31, 2019

1. The business of the Bank of Canada

The Bank of Canada (the Bank) is the nation’s central bank. The Bank is a corporation established under the Bank of Canada Act, is wholly owned by the Minister of Finance on behalf of the Government of Canada and is exempt from income taxes. The Bank does not offer banking services to the public.

The address of the Bank’s registered head office is 234 Wellington Street, Ottawa, Ontario.

The Bank conforms to the financial reporting requirements of the Bank of Canada Act as prescribed in the Bank’s bylaws, which require that the Bank’s financial statements be prepared in accordance with generally accepted accounting principles as set out in the CPA Canada Handbook, published by the Chartered Professional Accountants of Canada (CPA Canada). Consistent with CPA Canada guidance, the Bank is a government business enterprise as defined by the Canadian Public Sector Accounting Standards (PSAS) and, as such, adheres to the standards applicable to publicly accountable enterprises. In compliance with this requirement, the Bank has developed accounting policies in accordance with International Financial Reporting Standards (IFRS).

The Bank’s mandate under the Bank of Canada Act 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 profits. The Bank’s four core areas of responsibility are the following:

Monetary policy: The Bank conducts monetary policy to preserve the value of money by keeping inflation low, stable and predictable.
Financial system: The Bank promotes safe, sound and efficient financial systems, within Canada and internationally, and conducts transactions in financial markets in support of these objectives.
Funds management: The Bank provides funds management services for the Government of Canada, the Bank itself and other clients. The Bank is the fiscal agent for the government, providing treasury management services and administering and advising on the public debt and foreign exchange reserves.
Currency: The Bank designs, issues and distributes Canada’s bank notes, oversees the note distribution system and ensures a supply of quality bank notes that are readily accepted and secure against counterfeiting.

The corporate administration function supports the management of the Bank’s human resources, operations and strategic initiatives as well as the stewardship of financial, physical, information and technology assets.

The Bank has the exclusive right to issue Canadian bank notes, and the face value of these bank notes is the most significant liability on the Bank’s balance sheet. The Bank invests the proceeds from the issuance of bank notes into Government of Canada securities and Canada Mortgage Bonds, which are acquired on a non-competitive basis. These assets enable the Bank to execute its responsibilities for the monetary policy and financial system functions.

The interest income generated from the assets backing the bank notes in circulation (net of bank note production and distribution costs) is referred to as “seigniorage” and is the Bank’s primary source of revenue. It provides a stable and constant source of funding for the Bank’s operations, which enables the Bank to function independently of government appropriations. A portion of this revenue is used to fund the Bank’s operations and reserves, and the remaining net income is remitted to the Receiver General for Canada in accordance with the requirements of the Bank of Canada Act.

2. Basis of preparation

Compliance with International Financial Reporting Standards

These financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB).

The Board of Directors approved the financial statements on February 20, 2020.

Fiscal-agent and custodial activities

Responsibility for the operational management of the Government of Canada’s financial assets and liabilities is borne jointly by the Bank (as fiscal agent for the Government of Canada) and the Department of Finance Canada. In this role as fiscal agent, the Bank provides transactional and administrative support to the Government of Canada in certain areas, consistent with the requirements of section 24 of the Bank of Canada Act. As fiscal agent for the Government of Canada, the Bank does not bear the risks and rewards of the related financial assets and liabilities. These assets, liabilities and related revenues and expenses are not included in the financial statements of the Bank, except for the costs incurred by the Bank to fulfill its fiscal-agent role, as discussed in Note 18.

Securities safekeeping and other custodial services are provided to foreign central banks, international organizations and other government-related entities. Under the terms governing these services, the Bank is indemnified against losses. Any assets and income that are managed under these services are excluded from the Bank’s financial statements because they are not assets or income of the Bank.

Measurement base

The financial statements have been prepared on a historical cost basis, except for the following items:

financial instruments classified and measured at amortized cost, using the effective interest method;
the Bank’s shares in the Bank for International Settlements (BIS), which are measured at fair value through other comprehensive income (FVOCI); and
the net defined-benefit liability/asset of employee benefit plans, which is recognized as the net of the fair value of plan assets and the present value of the defined-benefit obligations.

Functional and presentation currency

The Bank’s functional and presentation currency is the Canadian dollar. The amounts in the notes to the financial statements of the Bank are in millions of Canadian dollars, unless otherwise stated.

Significant accounting policies

This section contains the Bank’s accounting policies that relate to the financial statements as a whole. When an accounting policy is applicable to a specific note to the financial statements, the policy and related disclosures are provided within that note.

Revenue recognition

Interest revenue is recognized in net income using the effective interest method.
Dividend revenue from the Bank’s investment in BIS shares is recognized as dividends are declared.
Other revenue is recognized in net income as it is earned, when it can be reliably measured and when collectability is probable.

Foreign currencies

Investment income and expenses denominated in foreign currencies are translated into Canadian dollars at the exchange rate in effect at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rate prevailing at the end of the reporting period. The resulting foreign exchange gains and losses are included in Other revenue. Gains or losses on equity investments classified as FVOCI, including those related to the exchange rate, are recognized in other comprehensive income.

Impairment of non-financial assets

Non-financial assets, including Property and equipment, Intangible assets and Right-of-use leased assets are reviewed annually for indicators of impairment and whenever events or changes in circumstances indicate that the carrying amount exceeds their recoverable amount.

Intangible assets under development are assessed for impairment annually.

Key accounting judgments, estimates and assumptions

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and other related information.

The Bank based its assumptions and estimates on the information available when these financial statements were prepared. Existing circumstances and assumptions about future developments may change, however, in response to market fluctuations or circumstances that are beyond the control of the Bank. In such cases, the impact will be recognized in the financial statements of a future reporting period.

Judgments, estimates and underlying assumptions are reviewed for appropriateness and consistent application on an ongoing basis. Revisions to accounting estimates are recognized in the reporting period in which the estimates are revised and in any future reporting periods affected.

Significant judgment and estimates are used in the measurement of financial instruments (Note 3) and employee benefits (Note 15).

Current changes to IFRS

Effective January 1, 2019, the Bank adopted IFRS 16 Leases and the related amendments in accordance with the transition provisions set out in IFRS 16, as described below. The adoption of IFRS 16 resulted in changes to the Bank’s accounting policies for the recognition and measurement of leases for which the Bank is a lessee. The Bank’s accounting policy for leases is discussed in Note 10. No other new or amended standards were adopted by the Bank in 2019 that had a significant impact on its financial statements.

Future changes to IFRS

There are currently no new or amended standards issued but not yet effective that are expected to have a significant impact on the Bank’s financial statements.

Transition to IFRS 16

As permitted by the transitional provisions of IFRS 16, management elected to apply the modified retrospective approach and not restate comparative figures since the impact of the adoption is not significant to the Bank’s financial statements. The Bank’s approach and the related impact upon transition to IFRS 16 is disclosed below.

Transitional expedients

Upon transition, management elected to apply the following transitional expedients available under IFRS 16:

Grandfather assessments of whether an agreement existing at the transition date and entered into before adoption contained a lease under the previous lease standard.
Measure the right-of-use leased assets equal to the related lease liability, adjusted for any prepaid or accrued lease payments recognized at the date of initial application, January 1, 2019.
Not apply the recognition and measurement requirements of IFRS 16 for leases of low-value assets as defined in the Bank’s accounting policy for leases in Note 10.

Financial statement impact of transition

Upon initial application of IFRS 16, the Bank recognized right-of-use leased assets of $54.4 million and lease liabilities of $52.7 million as at January 1, 2019, with no impact on retained earnings. The $1.7 million difference between the carrying amount of right-of-use leased assets and lease liabilities recognized at the transition date relates to prepaid lease payments made as of December 31, 2018. The prepaid lease balance was reclassified from prepaid lease expenses to right-of-use leased assets on January 1, 2019.

As the discount rate implicit in each lease contract is not readily determinable, when measuring lease liabilities, future lease payments are discounted using yields of zero-coupon Government of Canada bonds with durations approximating the remaining lease term as at January 1, 2019. The weighted average discount rate applied as at January 1, 2019, is 2.0 percent.

Impact on opening financial statements as at date of initial application—January 1, 2019

Partial statement of financial position
Assets
	Ref.	December 31, 2018	Effect of transition to IFRS 16	January 1, 2019
Capital assets
Property and equipment		600.3	-	600.3
Intangible assets		44.0	-	44.0
Right-of-use leased assets	Note 10	n.a.	54.4	54.4
		644.3	54.4	698.7
Other assets	A	189.7	(1.7)	188.0
Total assets		834.0	52.7	886.7
Liabilities and equity
Other liabilities	B	530.3	52.7	583.0
Total liabilities		530.3	52.7	583.0
Equity		525.3	-	525.3
Total liabilities and equity		1,055.6	52.7	1,108.3

(A) As noted above, the $1.7 million difference between the carrying amount of right-of-use leased assets and lease liabilities recognized at the transition date relates to prepaid lease payments made as of December 31, 2018. As a result, these prepaid lease payments were reclassified from All other assets to Right-of-use leased assets as at January 1, 2019.

Composition of other assets
	December 31, 2018	Effect of transition to IFRS 16	January 1, 2019
Bank note inventory	12.1	-	12.1
Net defined-benefit asset	149.5	-	149.5
All other assets	28.1	(1.7)	26.4
Total other assets	189.7	(1.7)	188.0

(B) As noted above, lease liabilities recognized on transition to IFRS 16 resulted in a $52.7 million increase to Other liabilities.

Composition of other liabilities
Net defined-benefit liability
	December 31, 2018	Effect of transition to IFRS 16	January 1, 2019
Surplus payable to the Receiver General for Canada	225.9	-	225.9
Pension benefit plans	66.2	-	66.2
Other benefit plans	160.9	-	160.9
Lease liabilities	n.a.	52.7	52.7
All other liabilities and provisions	77.3	-	77.3
Total other liabilities	530.3	52.7	583.0

Reconciliation of lease commitments at transition

The following table reconciles the Bank’s undiscounted operating lease commitments disclosed in the Bank’s financial statements as at December 31, 2018, to the lease liabilities recognized on initial application of IFRS 16 as at January 1, 2019.

Reconciliation of lease commitments at transition
Operating lease commitments as at December 31, 2018	25.6
Extension options reasonably certain to be exercised	33.6
Lease of low-value assets	(0.5)
Other	2.3
61.0
Discounted using the yield curves for zero-coupon bonds as at January 1, 2019	(8.3)
Lease liabilities recognized as at January 1, 2019	52.7

3. Financial instruments

Accounting policy

Recognition and derecognition

The Bank accounts for all financial instruments using settlement-date accounting. Financial assets and liabilities are recorded when the Bank becomes party to the contractual provisions of the instruments. Financial instruments are initially recognized at fair value plus transaction costs, if any.

The Bank derecognizes a financial asset when it considers that substantially all the risks and rewards of the asset have been transferred or when the contractual rights to the cash flows of the financial asset expire. The Bank does not derecognize collateral pledged by the Bank under standard repurchase agreements and securities-lending transactions since the Bank retains substantially all risks and rewards on the basis of the predetermined repurchase price. The Bank derecognizes financial liabilities when the Bank’s obligations are discharged, are cancelled or expire.

Classification and measurement

The Bank’s financial instruments are classified and subsequently measured as follows:

Financial instrument	Classification	Subsequent measurement
Cash and foreign deposits	Amortized cost	Amortized cost
Securities purchased under resale agreements	Amortized cost	Amortized cost
Other receivables	Amortized cost	Amortized cost
Government of Canada treasury bills	Amortized cost	Amortized cost
Canada Mortgage Bonds	Amortized cost	Amortized cost
Government of Canada bonds	Amortized cost	Amortized cost
Other investments	FVOCI	FVOCI
Bank notes in circulation	Face value	Face value
Deposits	Amortized cost	Amortized cost
Certain other liabilities	Amortized cost	Amortized cost

Financial assets at amortized cost

The Bank’s financial assets at amortized cost are primarily debt instruments with cash flows consisting solely of payments of principal and interest. Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, unless a financial asset has become credit-impaired, in which case interest revenue is calculated by applying the effective interest rate to its amortized cost net of the expected credit loss (ECL) provision.

Cash and foreign deposits is composed of cash on hand and highly liquid demand deposits in foreign currencies with other central banks or international financial institutions. They are principally held for cash flow management purposes and are managed by collecting contractual cash flows.

SPRAs, Other receivables, Government of Canada treasury bills, Canada Mortgage Bonds and Government of Canada bonds are debt instruments that are managed by collecting contractual cash flows. They are measured at amortized cost using the effective interest method^{footnote 3} less any ECLs.

Financial assets at FVOCI

Other investments is composed of shares in the BIS. These shares are not held for trading but rather as part of the Bank’s functions as a central bank. They are managed by collecting dividend payments. Unrealized changes in the fair value are recognized in other comprehensive income and accumulated in the investment revaluation reserve in Equity. Dividends are recognized in net income when they represent a return on equity and not a return of invested capital to shareholders.

Financial liabilities at face value

Bank notes in circulation represents those bank notes that have been produced and issued for use in the economy. Bank notes in circulation are non-interest-bearing liabilities and are due on demand. They are recorded at face value. The fair value of bank notes in circulation approximates their carrying value.

Financial liabilities at amortized cost

Deposits is composed of deposits by the Government of Canada, members of Payments Canada and other financial institutions, and also includes unclaimed balances remitted to the Bank in accordance with governing legislation. The Bank pays interest on the deposits for the Government of Canada, members of Payments Canada and some other financial institutions at short-term market rates. The Bank pays interest on unclaimed balances in accordance with governing legislation. Interest expense on deposits is included in net income. Deposits are managed by paying contractual cash flows and are measured at amortized cost using the effective interest method.

Impairment and write-off

The Bank calculates a loss allowance for ECLs on investments in debt instruments that are measured at amortized cost, and on foreign currency swap facility commitments and the Large Value Transfer System (LVTS) guarantee. The amount of ECLs, if any, is updated at each reporting date to reflect changes in credit risk since initial recognition. The Bank recognizes 12-month ECLs for financial instruments unless there has been a significant increase in credit risk since initial recognition, in which case lifetime ECLs are recognized.

The Bank writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery. Financial assets written off may still be subject to enforcement activities under the Bank’s recovery procedures. Any recoveries made are recognized in net income.

Accounting estimates and judgments

Impairment

Judgment is required when determining the appropriate amount of ECLs to recognize. The measurement of ECLs reflects an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes, the time value of money, and reasonable and supportable information that is available without undue cost or effort at the reporting date regarding past events, current conditions and forecasts of future economic conditions.

Significant judgments required for measuring ECLs include the following:

determining criteria for assessing whether a financial asset is considered to have low credit risk;
determining criteria for assessing what constitutes a significant increase in credit risk; and
choosing appropriate models and assumptions for the measurement of ECLs.

Financial assets are categorized into the following three stages depending on their assessed credit risk:

Stage 1

Financial assets are categorized as Stage 1 when first recognized. The Bank records an allowance for 12-month ECLs in profit or loss, and interest revenue is calculated on the gross carrying amount of the asset.

Stage 2

Financial assets are categorized as Stage 2 when they have experienced a significant increase in credit risk since initial recognition. The Bank records an allowance for lifetime ECLs, and interest revenue is calculated on the gross carrying amount of the asset.

Stage 3

Financial assets are categorized as Stage 3 when they are considered credit-impaired. The Bank records an allowance for lifetime ECLs, and interest revenue is calculated based on the net carrying amount of the asset (gross carrying amount less the loss allowance), rather than on its gross carrying amount.

Key concepts

Low credit risk

The Bank considers a financial asset to have low credit risk when the asset’s creditworthiness is judged to be “investment grade,” which the Bank broadly defines as equivalent to BBB or higher.

Significant increase in credit risk

In assessing whether the credit risk on a financial asset has increased significantly since initial recognition, the Bank compares the risk of a default occurring on the financial asset as at the reporting date with the risk as at the date of initial recognition. The Bank considers many factors when assessing a financial asset for a significant increase in credit risk, including but not limited to 1) an actual or expected significant deterioration in the financial asset’s credit rating; 2) significant deterioration in external market indicators of credit risk for a financial asset; or 3) existing or forecast adverse changes in the business, financial, regulatory, technological or economic environment of the counterparty that results in a significant decrease in the counterparty’s ability to meet its debt obligations.

In certain cases, the Bank may consider that events identified in the definition of default are a significant increase in credit risk as opposed to a true default. In making this assessment, the Bank considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Bank’s counterparties operate, and consideration of various external sources of actual and forecast economic information relating to the Bank’s core operations.

The Bank regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate. The Bank assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the reporting date and monitoring activities do not indicate the presence of a trigger event.

Credit-impaired

A financial asset is deemed credit-impaired when one or more events with a detrimental impact on its estimated future cash flows have occurred. Such events could include but are not limited to 1) significant financial difficulty of the counterparty; 2) a breach of contract, such as a default or past-due event; or 3) the likelihood that the counterparty will enter bankruptcy or other financial reorganization.

Default

For internal credit risk management purposes, the Bank considers a financial asset in default to be Stage 3 (credit-impaired) for ECL calculations in accordance with the contractual terms of the financial asset. The Bank considers treasury and interbank balances in default when the required intraday payments are not settled by the close of business, as outlined in the individual agreements.

As a part of a qualitative assessment of a counterparty’s credit risk, the Bank also considers a variety of instances that may indicate unlikeliness to pay. In certain cases, the Bank may consider an event as a significant increase in credit risk as opposed to a true default. When such events occur, the Bank carefully considers whether the event should result in treating the counterparty as defaulted and therefore assessed as Stage 3 for ECL calculations or whether Stage 2 is appropriate. Such events could include but are not limited to 1) internal assessment of the counterparty indicating default or near-default; 2) the counterparty experiencing unusual liquidity constraints; or 3) the counterparty having other past-due liabilities.

Cure

It is the Bank’s policy to consider a financial asset as “cured” and therefore reclassified out of Stage 3 when none of the default criteria has been present for a reasonable period given the nature of the instrument and surrounding circumstances. The decision whether to classify a financial asset as Stage 2 or Stage 1 once cured depends on the updated credit grade at the time of the cure, and whether this indicates there has been a significant increase in credit risk since initial recognition.

Expected credit loss approach and assessment

Debt instruments

For debt instruments, ECLs are estimated as the difference between all contractual cash flows that are due to the Bank in accordance with the contract and all the cash flows that the Bank expects to receive, discounted at the original effective interest rate.

The Bank’s debt instruments consist solely of Canadian sovereign debt, debt securities that are fully guaranteed by the Government of Canada and instruments that are fully collateralized by collateral with an equivalent credit rating of A- or higher. Given their high credit quality, when assessing ECLs on these instruments, the Bank has applied the low-risk practical expedient available under IFRS 9. The Bank corroborates external credit ratings on Canadian sovereign debt with an internal analysis performed annually, with quarterly updates. The Bank also performs continuous monitoring of relevant economic and financial developments. The Bank has assessed the ECLs for these instruments as negligible.

All the Bank’s financial assets subject to impairment assessments are Stage 1 and are considered to have low credit risk. There were no transfers of financial instruments between stages during the reporting period. The Bank did not record any ECLs on its financial instruments as at December 31, 2019 ($nil as at December 31, 2018) as the amount of the ECLs was deemed not to be significant. There are no significant past due or impaired amounts as at December 31, 2019.

Financial guarantees and loan commitments

This category includes the Bank’s foreign currency swap facility commitments and the LVTS guarantee. For guarantees and commitments made by the Bank that are not currently in use but there is a clear indication that use can reasonably be expected within the next 12 months, the Bank would assess the guarantee or commitment for any impairment on a case-by-case basis based on expected drawings.

For a financial guarantee contract, since the Bank is required to make payments only in the event of a default by the counterparty in accordance with the terms of the instrument that is guaranteed, the ECL allowance would be calculated as the expected payments to reimburse the holder for a credit loss that it incurs, less any amounts that the Bank expects to receive from the holder, the counterparty or any other party.

For undrawn loan commitments, the ECL is the present value of the difference between the contractual cash flows that are paid out by the Bank if the holder of the loan commitment draws down the loan and the cash flows that the Bank expects to recover.

As at December 31, 2019, no ECL had been recorded as none of the Bank’s financial guarantees and commitments had been drawn upon, nor does the Bank expect that any will be drawn upon within the next 12 months ($nil as at December 31, 2018).

Fair value of financial instruments

Judgment is also required in estimating the fair values of financial instruments. Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable, willing parties.

Financial instruments measured at fair value are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements:

Level 1

Unadjusted quoted prices in active markets for identical assets or liabilities, which represent actual and regularly occurring arm’s-length market transactions

Level 2

Inputs other than quoted prices included in Level 1, which are observable for the assets or liabilities either directly (e.g., prices for similar instruments, prices from inactive markets) or indirectly (e.g., interest rates, credit spreads)

Level 3

Unobservable inputs for the assets or liabilities that are not based on observable market data due to inactive markets (e.g., market participant assumptions)

The fair value hierarchy requires the use of observable market inputs wherever such inputs exist. In measuring fair value, a financial instrument is classified at the lowest level of the hierarchy for which a significant input has been considered.

Below are the valuation methods used to determine the fair value of each financial instrument and its associated level in the fair value hierarchy. There were no changes to valuation methods during the period.

Other investments (BIS shares)

Significant unobservable inputs (Level 3). Estimated as 70 percent of the Bank’s interest in the net asset value of the BIS at the reporting date. This is consistent with the methodology applied by the BIS for all share repurchases since the 1970s and was further endorsed in a decision by the International Court at The Hague relating to a share repurchase by the BIS in 2001 (the last share repurchase conducted by the BIS). The Bank expects the value of the BIS shares to fluctuate over time in conjunction with the strength of the BIS balance sheet and exchange rates.

Cash and foreign deposits, SPRAs, other receivables, bank notes in circulation, deposits and financial liabilities

Carrying amount (approximation to fair value assumed due to their nature as short term or due on demand)

Government of Canada treasury bills, Canada Mortgage Bonds, Government of Canada bonds

Quoted market prices (Level 1 and Level 2)

Supporting information

Financial instruments carried at fair value

Financial instruments carried at fair value are the Bank’s investment in BIS shares (Level 3). There were no transfers of amounts between levels during the reporting period.

	2019	2018
Fair value of BIS shares at January 1	433.3	403.6
Change in fair value recorded through other comprehensive income	28.5	5.1
Change due to Special Drawing Rights exchange differences recorded through other comprehensive income	(23.5)	24.6
Fair value of BIS shares at December 31	438.3	433.3

Financial instruments carried at amortized cost

The following table shows the fair value and carrying value of the Bank’s financial instruments classified in accordance with the fair value hierarchy described above for the Bank’s financial instruments that are carried at amortized cost and whose fair value does not approximate their carrying value.

As at December 31, 2019	Level 1	Level 2	Level 3	Fair value	Carrying value
Government of Canada treasury bills	23,364.6	-	-	23,364.6	23,367.4
Canada Mortgage Bonds	516.3	-	-	516.3	510.7
Government of Canada bonds	82,450.0	170.2	-	82,620.2	79,030.5
Total	106,330.9	170.2	-	106,501.1	102,908.6
As at December 31, 2018	Level 1	Level 2	Level 3	Fair value	Carrying value
Government of Canada treasury bills	24,225.7	-	-	24,225.7	24,217.8
Canada Mortgage Bonds	252.9	-	-	252.9	251.3
Government of Canada bonds	82,134.5	112.5	-	82,247.0	79,625.4
Total	106,613.1	112.5	-	106,725.6	104,094.5

The fair value of all other financial instruments approximates their carrying value.

4. Cash and foreign deposits

Cash and foreign deposits is composed of cash on hand and highly liquid demand deposits in foreign currencies with other central banks or international financial institutions. Included in the total balance of $6.4 million ($17.0 million as at December 31, 2018) was $4.6 million of foreign deposits ($15.7 million as at December 31, 2018).

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3, and related financial risks are discussed in Note 7.

5. Loans and receivables

Loans and receivables is composed primarily of SPRAs and, if any, advances to members of Payments Canada. These transactions are obligations of Payments Canada members and are fully collateralized in accordance with publicly disclosed collateral eligibility and margin requirements. The remaining amount is composed primarily of trade receivables.

Securities purchased under resale agreements is composed of overnight repurchase (repo) operations and term repo operations, in which the Bank purchases securities from designated counterparties with an agreement to sell them back at a predetermined price on an agreed transaction date. The overnight repo matures the next business day and is used to support the effective implementation of monetary policy by withdrawing intraday liquidity, thereby reinforcing the Bank’s target for the overnight rate. The term repo generally matures 1 to 90 business days after issuance and is used for balance sheet management, to promote the orderly functioning of Canadian financial markets and to provide the Bank with information on conditions in short-term funding markets. Balances outstanding as at December 31, 2019, consist of agreements with original terms to maturity ranging from 28 to 84 days (from 25 to 84 days as at December 31, 2018). In September 2019, the Bank started recognizing National Housing Act Mortgage-Backed Securities as acceptable collateral for the term repo program.

Advances to members of Payments Canada are collateralized liquidity loans made under the Bank’s Standing Liquidity Facility to facilitate overnight settlement in the LVTS. These advances mature the next business day. Interest on overnight advances is calculated at the Bank rate, which is the rate of interest that the Bank charges on one-day loans to major financial institutions. Collateral pledged for these advances comes from a pool of eligible collateral in which the Bank has the discretion to choose the highest-quality collateral to cover any advances granted. As at December 31, 2019, there were no advances to members of Payments Canada ($nil as at December 31, 2018).

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3, and related financial risks are discussed in Note 7.

6. Investments

The Bank’s investments are composed of Government of Canada treasury bills, Canada Mortgage Bonds, Government of Canada bonds and other investments. As part of the regular management of its balance sheet, the Bank acquires securities to offset its liabilities, which consist mainly of bank notes in circulation and Government of Canada deposits.

Other investments is composed solely of the Bank’s holdings of 9,441 BIS shares (9,441 BIS shares as at December 31, 2018), which are held as part of its functions as a central bank and are long-standing in nature. Ownership of BIS shares is limited to central banks, and new shares can be acquired only following an invitation to subscribe extended by the BIS Board of Directors. The shares are non-transferable unless prior written consent is obtained from the BIS.

The Bank operates a securities-lending program to support the liquidity of Government of Canada securities by providing the market with a secondary and temporary source of these securities. These transactions are fully collateralized by securities and are generally one business day in duration. Securities lent through the securities-lending program continue to be accounted for as Investments for the duration of the loan period. Lending fees charged by the Bank on these transactions are included in Other revenue at the loan maturity date. As at December 31, 2019, the Bank was not engaged in any securities-lending activities ($nil as at December 31, 2018).

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3, and related financial risks are discussed in Note 7.

7. Financial risk management

The Bank maintains a comprehensive risk management and control framework to manage its risks. The Executive Council oversees enterprise risk management and the implementation of sound management processes to safeguard the Bank. The Board of Directors has an oversight role in the Bank’s performance of risk management.

The Bank is exposed to financial risks associated with its financial instruments, including credit, market and liquidity risk. The Financial Risk Office monitors and reports on the financial risks related to the Bank’s statement of financial position.

The following is a description of those risks and how the Bank manages its exposure to them.

Credit risk

Credit risk is the possibility of loss due to the failure of a counterparty or guarantor to meet payment obligations in accordance with agreed-upon terms.

The Bank is exposed to credit risk through its cash and foreign deposits, investments and advances to members of Payments Canada, and through market transactions conducted in the form of SPRAs and loans of securities. The maximum exposure to credit risk is estimated to be the carrying value of those items. The Bank is also exposed to credit risk through its guarantee of the LVTS and through the execution of foreign currency contracts. The maximum exposure under guarantees and foreign currency contracts is discussed in Note 16.

There are no past due or impaired amounts.

Concentration of credit risk

The Bank’s investment portfolio represents 86 percent of the carrying value of its total assets (90 percent in 2018). The credit risk associated with the Bank’s investment portfolio is low because the securities held are primarily direct obligations of the Government of Canada or are fully guaranteed by the Government of Canada, which holds a credit rating of AAA and has no history of default.

SPRAs represent 13 percent of the carrying value of the Bank’s total assets (9 percent as at December 31, 2018). The fair value of collateral pledged to the Bank against these financial instruments at the end of the reporting period is presented below.

	2019		2018
As at December 31	$	%	$	%
Securities issued or guaranteed by the Government of Canada	2,993.2	18.7	469.1	4.2
Securities issued or guaranteed by a provincial government	12,552.0	78.4	10,695.5	95.8
Securities guaranteed by a Crown corporation of the Government of Canada^{table c4 note *}	460.3	2.9	-	-
Total fair value of collateral pledged to the Bank	16,005.5	100.0	11,164.6	100.0
Carrying value of collateralized securities	15,516.5	100.0	10,673.0	100.0
Collateral as a percentage of carrying value		103.2		104.6
Table c4 note(s) Table c4 note * Canada Mortgage and Housing Corporation Return to table c4 note * referrer

In the unlikely event of a counterparty default, collateral can be liquidated to offset credit exposure. Collateral is taken in accordance with the Bank’s publicly disclosed eligibility criteria and margin requirements, which are accessible on its website. Strict eligibility criteria are set for all collateral, and the credit quality of collateral is managed through a set of restrictions based on asset type, term to maturity and credit attributes, including ratings of the securities pledged.

Market risk

Market risk is the potential for adverse changes in the fair value or future cash flows of a financial instrument due to changes in market variables, such as interest rates, foreign exchange rates and market prices. It is composed of interest rate risk, currency risk and other price risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.

The Bank’s exposure to interest rate risk arises from fluctuations in the future flows of cash and foreign deposits held by the Bank and deposits held at the Bank by other institutions because these instruments are subject to variable interest rates. The remainder of the Bank’s financial assets and liabilities have either fixed interest rates or are non-interest-bearing.

The numbers below show the effect as at December 31 of an increase (decrease) in interest rates of 25 basis points on the interest paid on Government of Canada deposits, which represent substantially all of the Bank’s interest rate risk exposure on financial liabilities.

As at December 31	2019	2018
Interest expense on Government of Canada deposits	57.9 / (57.9)	57.3 / (57.3)

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Given the small size of the Bank’s net foreign currency exposure relative to its total assets, currency risk is not considered significant.

The Bank is exposed to currency risk primarily by holding shares in the BIS. These shares are denominated in Special Drawing Rights (SDRs). The SDR serves as the unit of account for the International Monetary Fund, and its value is based on a basket of five major currencies: the euro, the US dollar, the British pound, the Japanese yen and the Chinese renminbi. SDRs are translated into Canadian-dollar equivalents at the rates prevailing on the date when the fair value is determined.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices (other than those arising from changes in interest and exchange rates).

The Bank is exposed to other price risk through its investment in the BIS. As discussed in Note 3, the fair value of these shares is estimated on the basis of the net asset value of the BIS, less a discount of 30 percent. Accordingly, the fair value fluctuations of these shares reflect movements in the net asset value of the BIS and exchange rates as discussed above. The other price risk associated with BIS shares is incidental to the reason for holding them, as discussed in Note 6.

Liquidity risk

Liquidity risk is the potential for loss if the Bank is unable to meet its financial obligations as they become due. Liabilities with no fixed maturity include bank notes in circulation and Government of Canada deposits, with the remaining liabilities (deposits of members of Payments Canada, SSRAs (if any) and other financial liabilities) due within 12 months. The Bank is also exposed to liquidity risk through its guarantee of the LVTS, as discussed in Note 16.

Historical experience has shown that bank notes in circulation provide a stable source of long-term funding for the Bank. In the event of an unexpected redemption of bank notes or a significant withdrawal from the Government of Canada’s deposit for the prudential liquidity-management plan, the Bank can settle the obligation by means of several tools, including the sale of highly liquid investments backing those liabilities.

Also, as the nation’s central bank, the Bank is the ultimate source of liquid funds to the Canadian financial system and has the power and operational ability to create Canadian-dollar liquidity in unlimited amounts at any time. This power is exercised within the Bank’s commitment to keeping inflation low, stable and predictable.

The following table presents a maturity analysis of the Bank’s financial assets and liabilities. The balances in this table do not correspond to the balances in the statement of financial position because the table presents all cash flows on an undiscounted basis.

As at December 31, 2019	No fixed maturity	Within 12 months	1 to 5 years	More than 5 years	Total
FINANCIAL ASSETS
Cash and foreign deposits	6.4	-	-	-	6.4
Loans and receivables	-	15,538.2	-	-	15,538.2
Investments
Government of Canada treasury bills	-	23,500.0	-	-	23,500.0
Canada Mortgage Bonds	-	13.6	544.5	-	558.1
Government of Canada bonds	-	17,270.7	41,356.8	32,938.4	91,565.9
BIS shares	438.3	-	-	-	438.3
	444.7	56,322.5	41,901.3	32,938.4	131,606.9
FINANCIAL LIABILITIES
Bank notes in circulation	93,094.3	-	-	-	93,094.3
Deposits
Government of Canada	21,765.6	-	-	-	21,765.6
Members of Payments Canada	-	249.5	-	-	249.5
Other deposits	3,228.2	-	-	-	3,228.2
Other financial liabilities	-	487.1	-	-	487.1
	118,088.1	736.6	-	-	118,824.7
Net maturity difference	(117,643.4)	55,585.9	41,901.3	32,938.4	12,782.2

As at December 31, 2018	No fixed maturity	Within 12 months	1 to 5 years	More than 5 years	Total
FINANCIAL ASSETS
Cash and foreign deposits	17.0	-	-	-	17.0
Loans and receivables	-	10,687.3	-	-	10,687.3
Investments
Government of Canada treasury bills	-	24,375.0	-	-	24,375.0
Canada Mortgage Bonds^{table c7 note *}	-	6.4	275.5	-	281.9
Government of Canada bonds	-	16,744.3	42,287.8	33,543.4	92,575.5
BIS shares	433.3	-	-	-	433.3
	450.3	51,813.0	42,563.3	33,543.4	128,370.0
FINANCIAL LIABILITIES
Bank notes in circulation	90,193.1	-	-	-	90,193.1
Deposits
Government of Canada	21,725.6	-	-	-	21,725.6
Members of Payments Canada	-	250.5	-	-	250.5
Other deposits	2,830.1	-	-	-	2,830.1
Other financial liabilities	-	303.2	-	-	303.2
	114,748.8	553.7	-	-	115,302.5
Net maturity difference	(114,298.5)	51,259.3	42,563.3	33,543.4	13,067.5
Table c7 note(s) Table c7 note * The 2018 figure for expected undiscounted future cash flows from Canada Mortgage Bonds was adjusted to reflect all future payments. Return to table c7 note * referrer

8. Property and equipment

Property and equipment consists of land, buildings, computer equipment, other equipment and related projects in progress.

Accounting policy

Property and equipment is measured at cost less accumulated depreciation, except for land, which is not depreciated, and is net of any related impairment losses. Projects in progress are measured at cost but are not depreciated until the asset is available for use. Cost includes expenditures that are directly attributable to the acquisition or construction of the asset.

When major components of an item of property and equipment have different useful lives, they are accounted for as separate items of property and equipment. Upon replacing a significant part of an item of property and equipment, the carrying amount of the replaced part is derecognized and any gain or loss is recognized in depreciation.

Depreciation is calculated using the straight-line method and is applied over the estimated useful lives of the assets. The estimated useful lives and the depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The estimated useful lives for major asset classes are as follows:

Buildings 15 to 65 years
Computer equipment 3 to 10 years
Other equipment 5 to 20 years

Leasehold improvements (included in Other equipment) are depreciated over the lesser of their useful life or the term of the lease.

Accounting estimates and judgments

Judgment is required when determining:

which costs are directly attributable to a fixed asset (e.g., labour, overhead);
when income or expenses derived from projects in progress are recognized as part of the asset cost;
the appropriate useful life over which such costs should be depreciated; and
whether existing assets are subject to impairment.

Supporting information

Carrying amount of property and equipment
Cost
	Land and buildings	Computer equipment	Other equipment	Total
Balances as at December 31, 2017	578.5	82.4	81.9	742.8
Additions	-	60.1	8.5	68.6
Disposals	(2.7)	-	(13.2)	(15.9)
Transfers to other asset categories	-	-	-	-
Balances as at December 31, 2018	575.8	142.5	77.2	795.5
Additions	1.0	21.6	7.3	29.9
Disposals	-	-	(0.8)	(0.8)
Transfers to other asset categories	(1.4)	0.3	1.1	-
Balances as at December 31, 2019	575.4	164.4	84.8	824.6
Depreciation
Balances as at December 31, 2017	(106.1)	(34.0)	(33.7)	(173.8)
Depreciation expense	(18.3)	(12.7)	(6.3)	(37.3)
Disposals	2.7	-	13.2	15.9
Transfers to other asset categories	-	-	-	-
Balances as at December 31, 2018	(121.7)	(46.7)	(26.8)	(195.2)
Depreciation expense	(18.0)	(15.5)	(6.0)	(39.5)
Disposals	-	-	0.7	0.7
Transfers to other asset categories	-	-	-	-
Balances as at December 31, 2019	(139.7)	(62.2)	(32.1)	(234.0)
Carrying amounts
Balances as at December 31, 2018	454.1	95.8	50.4	600.3
Balances as at December 31, 2019	435.7	102.2	52.7	590.6

Projects in progress
	Land and buildings	Computer equipment	Other equipment	Total
Included in Carrying amounts at December 31, 2018	1.0	60.4	8.3	69.7
Commitments at December 31, 2018	1.1	11.8	4.2	17.1
Included in Carrying amounts at December 31, 2019	0.2	18.5	8.4	27.1
Commitments at December 31, 2019	2.4	5.4	2.8	10.6

The commitments at December 31, 2019, consist primarily of computer and mechanical equipment related to resiliency initiatives.

9. Intangible assets

Intangible assets are identifiable non-monetary assets without physical substance that represent future economic benefits and are controlled by the Bank. The Bank’s intangible assets consist of computer software that has been developed internally or acquired externally.

Accounting policy

Costs that are directly associated with the internal development of identifiable software are recognized as intangible assets if, in management’s best estimate, the asset can technically be completed and will provide a future economic benefit to the Bank. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

Computer software assets that are acquired by the Bank and have finite useful lives are measured at cost less accumulated amortization and impairment losses.

Amortization is calculated using the straight-line method and is applied over the estimated useful lives of the assets, which may vary from 3 to 15 years. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

Accounting estimates and judgments

Judgment is required when determining:

which costs related to non-tangible expenditures are eligible for capitalization;
the appropriate useful life over which such costs should be amortized; and
whether existing assets are subject to impairment.

Supporting information

Carrying amount of intangible assets
Cost
	Internally generated software	Other software	Total
Balances as at December 31, 2017	58.7	71.6	130.3
Additions	4.0	9.7	13.7
Disposals	-	-	-
Transfers from other asset categories	-	-	-
Balances as at December 31, 2018	62.7	81.3	144.0
Additions	15.3	11.0	26.3
Disposals	-	-	-
Transfers to other asset categories	-	-	-
Balances as at December 31, 2019	78.0	92.3	170.3
Amortization
Balances as at December 31, 2017	(44.7)	(45.5)	(90.2)
Amortization expense	(2.7)	(7.1)	(9.8)
Disposals	-	-	-
Transfers from other asset categories	-	-	-
Balances as at December 31, 2018	(47.4)	(52.6)	(100.0)
Amortization expense	(3.7)	(7.2)	(10.9)
Disposals	-	-	-
Transfers to other asset categories	-	-	-
Balances as at December 31, 2019	(51.1)	(59.8)	(110.9)
Carrying amounts
Balances as at December 31, 2018	15.3	28.7	44.0
Balances as at December 31, 2019	26.9	32.5	59.4

	Internally generated software	Other software	Total
Projects in progress
Included in Carrying amounts at December 31, 2018	0.2	7.8	8.0
Commitments at December 31, 2018	7.4	1.4	8.8
Included in Carrying amounts at December 31, 2019	14.8	18.3	33.1
Commitments at December 31, 2019	7.5	2.6	10.1

10. Right-of-use leased assets and lease liabilities

The Bank’s leases primarily consist of leases for rental of data centre facilities in support of the Bank’s business resilience posture and rental of office space for regional offices (Halifax, Montréal, Toronto, Calgary and Vancouver).

Accounting policy

At the inception of a contract, the Bank assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period in time in exchange for consideration. The Bank recognizes a right-of-use leased asset and lease liability at the lease commencement date. The right-of-use leased asset is initially measured as the sum of:

the value of the initial amount of the lease liability included with Other liabilities as discussed in Note 14;
the value of initial direct costs incurred;
an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located; and
any lease payments made at or before the lease commencement date, less any lease incentives received.

Right-of-use leased assets are depreciated over the lesser of the end of the useful life of the right-of-use leased asset or the lease term on a straight-line basis. The lease term includes periods covered by an option to extend if the Bank is reasonably certain to exercise that option. The right-of-use leased asset may be remeasured from time to time to reflect certain remeasurements in the related lease liability and impairment losses, if any.

Management has elected to apply the practical expedient not to recognize right-of-use leased assets and lease liabilities for short-term leases that have a term of 12 months or less and leases of low-value assets. The payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.

In 2018, before the adoption of IFRS 16, payments made for leases classified as operating leases were charged to net income on a straight-line basis over the term of the lease. The Bank was not party to any significant finance leases.

Accounting estimates and judgments

Judgment is required when determining:

the appropriate term over which the right-of-use leased asset should be depreciated;
the appropriate lease term, in consideration of early termination or renewal clauses, to be considered in measurement of the lease liability;
the appropriate discount rate to be used in the measurement of the lease liability; and
whether existing right-of-use leased assets are subject to impairment.

Supporting information

Carrying amount of right-of-use leased assets
2019	Data centres	Offices	Other	Total
Cost
Balances as at January 1, 2019	36.1	16.6	1.7	54.4
Additions	-	-	1.0	1.0
Balances as at December 31, 2019	36.1	16.6	2.7	55.4
Depreciation
Balances as at January 1, 2019	-	-	-	-
Depreciation expense	(3.1)	(1.1)	(0.3)	(4.5)
Balances as at December 31, 2019	(3.1)	(1.1)	(0.3)	(4.5)
Carrying amounts
Balances as at January 1, 2019	36.1	16.6	1.7	54.4
Balances as at December 31, 2019	33.0	15.5	2.4	50.9

Carrying amount of lease liabilities
As at December 31, 2019	Data centres	Offices	Other	Total
Balances as at January 1, 2019	36.1	16.6	-	52.7
Finance charges	0.7	0.3	-	1.0
New lease liabilities	-	-	1.0	1.0
Lease payments	(3.0)	(0.9)	(0.2)	(4.1)
Total	33.8	16.0	0.8	50.6

During the year, the Bank has recognized $0.2 million in expenses related to leases of low-value assets for which the recognition exemption has been applied. The Bank does not have any short-term leases for which the recognition exemption has been applied.

Maturity analysis for lease liabilities (undiscounted)
As at December 31, 2019	Data centres	Offices	Other	Total
Less than 5 years	17.0	5.5	0.9	23.4
Between 5 and 10 years	15.2	5.3	-	20.5
Between 10 and 15 years	5.6	5.5	-	11.1
More than 15 years	-	3.0	-	3.0
Total	37.8	19.3	0.9	58.0

11. Other assets

Other assets is composed of bank note inventory (production materials, including the polymer substrate and ink), any net defined-benefit asset related to the Bank of Canada Pension Plan, and all other assets, which are primarily prepaid expenses.

Accounting policy

Bank note inventory is measured at the lower of the cost or the net realizable value. The cost to produce finished bank notes is expensed as incurred. Prepaid expenses are recorded at cost and amortized over the period during which the services are received.

The accounting policy for the net defined-benefit asset related to the Bank of Canada Pension Plan is discussed in Note 15.

Supporting information

Composition of other assets
As at December 31	Note	2019	2018
Bank note inventory		8.5	12.1
Net defined-benefit asset	15	34.1	149.5
All other assets		24.1	28.1
Total other assets		66.7	189.7

12. Bank notes in circulation

Bank notes in circulation represents those bank notes that have been produced and issued for use in the economy. They are non-interest-bearing liabilities and are due on demand.

Accounting policy

Bank notes in circulation are recorded at face value. The fair value of bank notes in circulation approximates their carrying value. The Bank’s assessment of related financial risks is discussed in Note 7.

Supporting information

In accordance with the Bank of Canada Act, the Bank has the sole authority to issue bank notes for circulation in Canada. Currently, bank notes are issued in denominations of $5, $10, $20, $50 and $100. Other bank notes, as described in the table below, are denominations that are still in circulation but are no longer issued.

The face value of notes in circulation, presented by denomination, is as follows:

As at December 31	2019	2018
$5	1,469.6	1,428.7
$10	1,665.6	1,632.8
$20	18,770.5	19,570.2
$50	17,456.5	16,405.6
$100	52,730.8	50,111.6
Other bank notes	1,001.3	1,044.2
Total bank notes in circulation	93,094.3	90,193.1

13. Deposits

Deposits is composed of deposits by the Government of Canada, members of Payments Canada and other financial institutions and also includes unclaimed balances remitted to the Bank in accordance with governing legislation. The Bank pays interest on the deposits for the Government of Canada, members of Payments Canada and some other financial institutions at short-term market rates. The Bank pays interest on unclaimed balances in accordance with governing legislation. Interest expense on deposits is included in net income.

Deposits from the Government of Canada consist of $1,765.6 million for operational balances and $20,000.0 million held for the prudential liquidity-management plan ($1,725.6 million and $20,000.0 million, respectively, as at December 31, 2018).

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3, and related financial risks are discussed in Note 7.

14. Other liabilities

Other liabilities consists of surplus payable to the Receiver General for Canada, the net defined-benefit liability for both the pension benefit plans and the other employee benefit plans and all other liabilities, which consist of accounts payable, accrued liabilities, provisions and lease liabilities.

Accounting policy

The Bank’s policies on classifying and measuring financial instruments (accounts payable and accrued liabilities, within the context of Other liabilities) are discussed in Note 3, and related financial risks are discussed in Note 7. The Bank’s accounting policy for the net defined-benefit liability of the Bank of Canada Pension Supplementary Arrangement and other employee benefit plans is discussed in Note 15. The Bank’s accounting policy for the lease liabilities is discussed in Note 10.

A provision is recognized if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated reliably as at the statement of financial position date and it is probable that an outflow of economic benefits will be required to settle the obligation.

Accounting estimates and judgments

Estimates for provisions consider the present value of the cash flows expected to be required to settle the obligation.

Supporting information

Composition of other liabilities
As at December 31	Note	2019	2018
Surplus payable to the Receiver General for Canada		368.3	225.9
Net defined-benefit liability	15
Pension benefit plans		97.3	66.2
Other benefit plans		190.5	160.9
Lease liabilities	10	50.6	n.a.
All other liabilities		68.2	77.3
Total other liabilities		774.9	530.3

Surplus payable to the Receiver General for Canada

The following table reconciles the opening and closing balances of the surplus payable to the Receiver General for Canada, which is based on the requirements of section 27 of the Bank of Canada Act and the Bank’s remittance agreement with the Minister of Finance, as discussed in Note 17.

As at December 31	2019	2018
Opening balance at beginning of year	225.9	213.9
Surplus for the Receiver General for Canada	1,168.3	1,216.2
Remittance of surplus to the Receiver General for Canada	(1,025.9)	(1,204.2)
Closing balance at end of year	368.3	225.9

15. Employee benefits

The Bank provides employees with several employee benefit plans, consisting of short-term employee benefits, post-employment benefits, long-term employee benefits and termination benefits.

The Bank of Canada Pension Plan (the Pension Plan) was established under the provisions of the Bank of Canada Act, 1934, and has remained in accordance with the Bank of Canada Act as subsequently amended. The Pension Plan is a registered pension plan as defined in the Income Tax Act (ITA) and, consequently, is not subject to income taxes.

The Bank of Canada Supplementary Pension Arrangement (SPA) was created to pay pension benefits to Bank employees with annual earnings above the amount covered by the Pension Plan, as provided under the ITA. The Supplementary Trust Fund, which holds and invests the funds of the SPA, is a retirement compensation arrangement as defined in the ITA.

The Bank is the administrator of the pension plans. The Bank’s Board of Directors has established a Pension Committee and has delegated to it the responsibility for carrying out the Bank’s duties as administrator of the plans, including adherence to the guidelines established in the Statement of Investment Policy and Procedures (SIPP) for each plan, which are approved annually by the Board. A separate trust fund has been established for each plan to receive and invest contributions and pay benefits due under the plans. The assets cannot be used for any purpose other than payment of pension benefits and related administration fees.

The Bank also sponsors other benefit plans provided to employees, specifically the unfunded post-employment defined-benefit plans for life insurance and eligible health and dental benefits, the unfunded long-service benefit program for employees hired before January 1, 2003, and the long-term disability program.

Accounting policy

Employee benefits refer to all forms of consideration given by an entity in exchange for services rendered by employees or for the termination of employment as described in the following table:

Category	Description	Measurement and recognition
Short-term employee benefits	Benefits expected to settle wholly within 12 months of when the service was rendered. Refers to salary, bonus, annual leave, health benefits, dental care and statutory benefits.	The liability and related expense are recognized in the reporting period in which they occur and are measured on an undiscounted basis.
Post-employment benefits	Benefits payable after the completion of employment (pension plans and other benefits). Refers to the Pension Plan, the SPA, life insurance and eligible health and dental benefits, and the long-service benefit program.	The net asset or liability recognized is composed of the present value of the defined-benefit obligation less the fair value of plan assets, when applicable. The defined-benefit obligation is calculated by discounting estimated future cash flows using an appropriate interest rate.^{table d10 note *} The plan assets of funded benefit plans are measured at their fair value at the end of the reporting period. The expense recognized in net income for the reporting period consists of current service costs, past service costs, net interest on the net defined-benefit liability/asset, gains or losses arising on settlement (if applicable) and administrative costs. Net interest is calculated by applying the discount rate to the net defined-benefit liability/asset. Remeasurements^{table d10 note †} are recognized immediately in other comprehensive income in the reporting period in which they occur and are accumulated in Equity. Remeasurements comprise actuarial gains and losses, the return on plan assets and the effect of the asset ceiling (if applicable). They exclude amounts included in net interest on the net defined-benefit liability/asset. Past service costs are recognized at the earlier of when the plan amendment or curtailment occurs or when the Bank recognizes related restructuring costs or termination benefits.
Long-term employee benefits	Refers to the long-term disability program.	The liability recognized is the present value of the defined-benefit obligation, calculated by discounting estimated future cash flows using an appropriate interest rate.^{table d10 note *} The expense recognized in net income for the reporting period consists of current service costs, interest costs, remeasurement gains and losses, and past service costs. The current service costs and the benefit obligations of the plan are actuarially determined on an event-driven accounting basis.
Termination benefits	Benefits provided in exchange for termination.	The liability and related expense is recognized in net income at the earlier of when the Bank can no longer withdraw the offer of the termination benefit or when the Bank recognizes any related restructuring costs.
Table d10 note(s) Table d10 note * The interest rate used is based on those of AA-rated Canadian corporate bonds with terms to maturity approximating the estimated duration of the obligation. Return to table d10 note * referrer Table d10 note † The current service costs and the benefit obligations of the plans are actuarially determined using the projected unit credit method. Return to table d10 note † referrer

Accounting estimates and judgments

The cost of the defined-benefit pension plans and other benefit plans and the present value of the benefit obligations are determined using actuarial valuations. An actuarial valuation involves using various assumptions determined by management and reviewed annually by the actuary that may differ from future developments. These assumptions include:

discount rates,
inflation rates,
rates of compensation increases,
rates of pension increases,
medical cost trends, and
mortality rates.

The most recent actuarial valuation for the purposes of funding the pension plans was done as at January 1, 2019, and the next required valuation will be as at January 1, 2020. Benefits are based on years of service and the average full-time salary for the best five consecutive years. They are indexed to reflect changes in the consumer price index on the date payments begin and each January 1 thereafter.

The significant assumptions used are as follows (on a weighted-average basis):

As at December 31	2019	2018	2019	2018
	Pension benefit plans		Other benefit plans
Defined-benefit obligation
Discount rate^{table d11 note *}	3.20%	4.00%	3.15%	3.90%
Inflation rate^{table d11 note †}	2.00%	2.00%	n.a.	n.a.
Rate of compensation increase	3.00% + merit	3.00% + merit	3.00% + merit	3.00% + merit
Mortality table^{table d11 note ‡}	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)
Benefit plan expense
Discount rate^{table d11 note *}	4.00%	3.50%	3.90%	3.44%
Inflation rate^{table d11 note †}	2.00%	2.00%	n.a.	n.a.
Rate of compensation increase	3.00% + merit	3.00% + merit	3.00% + merit	3.00% + merit
Assumed medical cost trend
Initial medical cost trend rate	n.a.	n.a.	5.07%	5.12%
Ultimate medical cost trend rate	n.a.	n.a.	4.00%	4.00%
Year that the rate reaches the ultimate trend rate	n.a.	n.a.	2040	2040
Table d11 note(s) Table d11 note * The parameter most subject to change is the discount rate, which is determined by reference to Canadian AA-rated corporate bonds with terms to maturity approximating the duration of the obligation. The weighted-average duration of the defined-benefit obligation is approximately 18 to 20 years for the pension benefit plans (17 to 18 years in 2018) and 6 to 23 years for the other benefit plans (6 to 22 years in 2018). Return to table d11 note * referrer Table d11 note † Other benefit plans does not include an inflation rate adjustment since the adjustment is a component of Assumed medical cost trend. Return to table d11 note † referrer Table d11 note ‡ In 2019, the assumption for life expectancy for the plan valuations assumes that a male member reaching 60 will live for approximately 28 years (28 years in 2018) and a female member approximately 30 years (30 years in 2018). Return to table d11 note ‡ referrer

The mortality assumptions used in the plan valuations are based on tables issued by the Canadian Institute of Actuaries. Actuarial adjustments to the tables are applied when recommended by the plan’s actuaries.

Sensitivity analysis

Due to the complexities involved in the valuation and its long-term nature, a defined-benefit obligation is highly sensitive to changes in these assumptions.

The following table outlines the potential impact of changes in certain key assumptions used in measuring the defined-benefit obligations and benefit costs.

Discount rate
	*Increase (decrease) in obligation^{table d12 note }**
	Pension benefit plans	Other benefit plans
Impact of 0.10% increase	(37.1)	(3.3)
Impact of 0.10% decrease	38.3	3.3
Rate of compensation increase
Impact of 0.10% increase	7.7	0.4
Impact of 0.10% decrease	(7.6)	(0.4)
Mortality rate
Impact of 10.00% increase	(46.8)	(3.0)
Impact of 10.00% decrease	52.2	3.5
Inflation rate
Impact of 0.10% increase	33.1	n.a.
Impact of 0.10% decrease	(32.3)	n.a.
Medical cost trend rates
Impact of 1.00% increase	n.a.	34.5
Impact of 1.00% decrease	n.a.	(26.6)
Table d12 note(s) Table d12 note * The sensitivity analysis presented in this table is hypothetical and should be used with caution. The analysis is based on a change in assumptions while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The method and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year. Return to table d12 note * referrer

Supporting information

The changes to the net defined-benefit asset (liability) for the year are as follows:

Fair value of plan assets
	Pension benefit plans		Other benefit plans
	2019	2018	2019	2018
Fair value of plan assets as at January 1	1,826.1	1,868.3	-	-
Interest income	72.1	65.0	-	-
Remeasurement gains (losses)
Return on plan assets^{table d13 note *}	175.5	(85.0)	-	-
Bank contributions	7.5	21.4	-	-
Employee contributions	20.9	16.0	-	-
Benefit payments and transfers	(60.5)	(57.3)	-	-
Administration costs	(3.0)	(2.3)	-	-
Fair value of plan assets as at December 31	2,038.6	1,826.1	-	-
Defined-benefit obligation
Benefit obligation as at January 1	1,742.8	1,823.7	160.9	178.3
Current service cost	43.5	50.9	4.7	5.4
Interest cost	71.1	64.8	6.3	6.2
Past service cost	-	-	-	-
Employee contributions	20.9	16.0	-	-
Remeasurement (gains) losses
Arising from changes in demographic assumptions	-	-	-	-
Arising from changes in experience	12.8	(1.4)	-	-
Arising from changes in financial assumptions	271.2	(153.9)	26.4	(21.6)
Benefit payments and transfers	(60.5)	(57.3)	(7.8)	(7.4)
Defined-benefit obligation as at December 31	2,101.8	1,742.8	190.5	160.9
Net defined-benefit asset (liability)	(63.2)	83.3	(190.5)	(160.9)
Net defined-benefit asset	34.1	149.5	-	-
Net defined-benefit liability	(97.3)	(66.2)	(190.5)	(160.9)
Net defined-benefit asset (liability)	(63.2)	83.3	(190.5)	(160.9)
Benefit plan expenses recognized in net income	45.5	53.0	12.6	11.1
Remeasurement losses (gains) recognized in other comprehensive income	108.6	(70.3)	24.8	(21.1)
Table d13 note(s) Table d13 note * The return on plan assets excludes interest income and includes a $17.4 million unrealized loss ($19.7M unrealized gain in 2018) due to changes in foreign exchange rates. Return to table d13 note * referrer

The defined-benefit obligation, presented by membership category, is as follows:

As at December 31	2019	2018	2019	2018
	Pension benefit plans		Other benefit plans
Membership category
Active members	901.5	694.7	93.0	77.7
Pensioners	1,081.4	949.8	97.5	83.2
Deferred members	118.9	98.3	-	-
Total defined-benefit obligation	2,101.8	1,742.8	190.5	160.9

The cumulative remeasurement losses recognized in other comprehensive income are as follows:

As at December 31	2019	2018	2019	2018
	Pension benefit plans		Other benefit plans
Cumulative remeasurement gains (losses) recognized, beginning of year	(178.5)	(248.8)	3.8	(17.3)
Remeasurement gains (losses) recognized in current year	(108.6)	70.3	(24.8)	21.1
Cumulative remeasurement gains (losses) recognized, end of year	(287.1)	(178.5)	(21.0)	3.8

Pension benefit plans asset mix

The pension plans’ SIPPs require that investments be held in a diversified mix of asset types and also set out requirements for investment eligibility. The diversification of assets serves to decrease the variations in the expected return performance of the portfolio. For the Pension Plan, the current practice is to conduct an asset-liability modelling (ALM) study every three years. The ALM assists the Pension Committee in establishing an asset allocation that is consistent with the Pension Plan’s objectives and the Bank’s risk tolerance. The latest ALM report was prepared and presented to the Pension Committee in September 2018.

The pension plans’ investments are subject to credit, liquidity and market risks, the latter being the most significant risk due to the volatility of the assets. The pension plans’ liabilities are calculated using a discount rate determined by reference to Canadian AA-rated corporate bonds; a rate of return on plan assets inferior to the discount rate would result in a deficit. Requirements for asset diversification and investment eligibility serve as basic risk management tools for the investment portfolio.

The pension benefit plans assets consist of the following:

As at December 31	Quoted	Unquoted	Total	%	Quoted	Unquoted	Total	%
	2019				2018
Money market instruments	22.3	-	22.3	1.1	10.5	-	10.5	0.6
Equity instruments
Canadian equity funds	349.4	-	349.4	17.1	298.3	-	298.3	16.3
Foreign equity funds	556.4	-	556.4	27.3	474.1	-	474.1	26.0
Debt instruments^{table d16 note *}
Securities issued or guaranteed by the Government of Canada	145.8	-	145.8	7.2	134.5	-	134.5	7.4
Securities issued or guaranteed by a provincial government	147.5	-	147.5	7.2	130.2	-	130.2	7.1
Fixed-income funds	430.7	-	430.7	21.1	399.1	-	399.1	21.9
Other securities	5.2	-	5.2	0.3	6.4	-	6.4	0.3
Real estate funds	-	343.2	343.2	16.8	-	332.9	332.9	18.2
SPA statutory deposit	-	38.1	38.1	1.9	-	40.1	40.1	2.2
Total	1,657.3	381.3	2,038.6	100.0	1,453.1	373.0	1,826.1	100.0
Table d16 note(s) Table d16 note * Debt instruments consist of fixed-income securities and inflation-linked assets. Return to table d16 note * referrer

Total cash payments

Regulations governing federally regulated pension plans establish certain solvency requirements calculated under the assumption that the plans are terminated at the valuation date. In addition, actuarial valuations for funding purposes are required annually under the Pension Benefits Standards Act. The actuarial valuations of the Pension Plan completed as at January 1, 2019, reflect the Pension Plan’s performance in 2018.

On a solvency basis (which assesses the Pension Plan on the assumption that it would be terminated on the date of the valuation), the funding status of the Pension Plan had a solvency ratio of 112 percent (111 percent as at January 1, 2018). The valuation reported a solvency surplus of $179.2 million and a three-year average solvency surplus of $130.2 million ($169.4 million and $86.7 million, respectively, for the valuation completed at January 1, 2018).

On a going-concern basis (which assesses the Pension Plan over the long term on the assumption that it will operate indefinitely), the Pension Plan had a funding ratio of 140 percent (140 percent as at January 1, 2018). The valuation reported a going-concern surplus of $507.6 million ($478.1 million for the valuation completed at January 1, 2018).

The funding requirements of the Pension Plan are determined by the annual going-concern and solvency valuation results. Given the Pension Plan’s funding and solvency ratios, regulations under the ITA prohibited the Bank from making further contributions after June 2018. Bank contributions to the Pension Plan will resume depending on the results of actuarial valuations in subsequent years, with the next one scheduled for January 1, 2020. Contributions in 2020 will be based on the actuarial valuation as at January 1, 2020, and the Bank anticipates that, if the results of 2019 are in line with actuarial assumptions, its contributions will not resume in 2020 (no contributions to the Pension Plan were made by the Bank in 2019).

The SPA is funded through both employer and employee contributions. Employer contributions are based on the actuarial determination of the Bank’s accounting expense for the Plan. Effective January 1, 2020, the SPA’s employer contribution will be determined according to a going-concern valuation, which will be the sum of the employer’s share of the going-concern current service cost and the special payments necessary to amortize any deficit on the going-concern basis. Employer contributions to the SPA in 2020 are expected to be at $12.0 million.

16. Commitments, contingencies and guarantees

Commitments

A commitment is an enforceable, legally binding agreement to make a payment in the future for the purchase of goods or services. These amounts are not recorded in the statement of financial position because the Bank has not yet received the goods or services from the supplier. The amounts below are what the Bank has committed to pay based on current expected contract prices.

Commitments related to Property and equipment, Intangible assets and Lease liabilities are discussed in Note 8, Note 9 and Note 10, respectively.

The Bank has a long-term contract with an outside service provider for retail debt services. The Bank signed an amended agreement effective November 1, 2019, until December 31, 2023. As at December 31, 2019, payments totalling $75.5 million remained. The contract is modular, with a flexible pricing framework.

The Bank has long-term contracts with outside service providers for business recovery and data centre services, which expire between 2022 and 2026. As at December 31, 2019, fixed payments totalling $34.3 million remained.

As at December 31, 2019, the total minimum payments for long-term contracts, other than right-of-use leased assets, property and equipment, and intangible assets, were as follows:

As at December 31	2019
Due within one year	35.1
Due within one to three years	58.2
Due within three to five years	16.7
Thereafter	1.3
Total minimum payments	111.3

Foreign currency swap facilities

The Bank is a counterparty to several foreign currency swap facilities as follows:

As at December 31, 2019	Denominated in	Expiry date	Maximum available
Bilateral liquidity swap facilities with other central banks
Bank of England	British pounds	No expiry	Unlimited
Bank of Japan	Japanese yen	No expiry	Unlimited
Bank of Korea	South Korean won	No expiry	Unlimited
European Central Bank	euros	No expiry	Unlimited
Federal Reserve Bank of New York	US dollars	No expiry	Unlimited
Swiss National Bank	Swiss francs	No expiry	Unlimited
People’s Bank of China	renminbi	November 8, 2020	200,000.0
Other swap facilities
Exchange Fund Account of Canada	Canadian dollars	No expiry	Unlimited
Federal Reserve Bank of New York	US dollars	December 12, 2020	2,000.0
Banco de México	Canadian dollars	December 12, 2020	1,000.0
Bank for International Settlements	Canadian dollars	No expiry	100.0

Bilateral liquidity swap facilities with other central banks

The bilateral liquidity swap facilities were established to provide liquidity in each jurisdiction in any of their currencies, should market conditions warrant.

These facilities can be structured as either a Canadian-dollar liquidity swap or a foreign-currency liquidity swap arrangement and can be initiated by either party. The exchange rate applicable to the swap facilities is based on the prevailing market spot exchange rate as mutually agreed upon by the parties.

Other swap facilities

The other swap facilities established with the Federal Reserve Bank of New York and with the Banco de México expire on December 12, 2020, but are subject to annual renewal.

The Bank is party to a standing foreign currency swap facility with the Exchange Fund Account of Canada. There is no stated maximum amount under this agreement.

The Bank is also party to a swap facility with the BIS for operational purposes. Transactions executed under this agreement generally have a duration of one business day. The BIS swap was accessed for operational purposes both in 2019 and 2018.

None of the other liquidity or other swaps was accessed, by either party, in 2019 or 2018. No related commitments existed as at December 31, 2019 ($nil as at December 31, 2018).

Contingencies

Contingent liabilities are possible obligations that could result from uncertain future events outside the Bank’s control, or present obligations not recognized because the amount cannot be adequately measured or payment is not probable. Contingent liabilities are not recognized in the financial statements but are disclosed if significant.

BIS shares

The 9,441 shares in the BIS have a nominal value of SDR5,000 per share, of which 25 percent (i.e., SDR1,250) is paid up. The balance of SDR3,750 is callable at three months’ notice by a decision of the BIS Board of Directors. The Canadian equivalent of this contingent liability was $63.6 million as at December 31, 2019 ($67.2 million as at December 31, 2018) based on prevailing exchange rates.

Guarantees

LVTS guarantee

The LVTS is a large-value payment system, owned and operated by Payments Canada. Any deposit-taking financial institution that is a member of Payments Canada can participate in the LVTS, provided that it maintains a settlement account at the Bank of Canada, has the facilities to pledge collateral for LVTS purposes, and meets certain technical requirements. The system’s risk-control features, which include caps on net debit positions and collateral to secure the use of overdraft credit, are sufficient to permit the system to obtain the necessary liquidity to settle in the event of the failure of the single LVTS participant with the largest possible net amount owing. The Bank guarantees to provide this liquidity, and, in the event of a single-participant failure, the liquidity loan will be fully collateralized.

In the extremely unlikely event that there were defaults by more than one participant during the LVTS operating day in an aggregate amount greater than the largest possible net amount owing by a single participant, there would not likely be enough collateral to secure the amount of liquidity that the Bank would need to provide to settle the system. This could result in the Bank having unsecured claims on the defaulting participants in excess of the amount of collateral pledged to the Bank to cover the liquidity loans. The Bank would have the right, as an unsecured creditor, to recover any amount of its liquidity loan that was unpaid.

Since the guarantee would be called upon only if a series of extremely low-probability events were to occur, the likelihood of the guarantee being executed is remote. Furthermore, the Bank’s maximum exposure under this guarantee is not determinable because the extent of exposure would be based on the unique circumstances of the failure event. No amount has ever been paid as a result of this guarantee. For that reason, no amount is or has ever been provided for in the liabilities of the Bank.

Other indemnification agreements

In the normal course of operations, the Bank includes indemnification clauses within agreements with various counterparties in transactions such as service agreements, software licences, leases and purchases of goods. Under these agreements, the Bank agrees to indemnify the counterparty against loss or liability arising from acts or omissions of the Bank in relation to the agreement. The nature of the indemnification agreements prevents the Bank from making a reasonable estimate of the maximum potential amount that the Bank would be required to pay. No indemnification amount has ever been paid under such agreements.

Insurance

The Bank does not normally insure against direct risks of loss to the Bank, except for potential liabilities to third parties, and when there is a legal or contractual obligation to carry insurance.

Any costs arising from risks not insured are recognized in the financial statements if, due to a past event, the Bank has a present legal or constructive obligation that can be estimated reliably as at the reporting date and it is probable that an outflow of economic benefits will be required to settle the obligation.

17. Equity

The Bank manages its capital to ensure compliance with the Bank of Canada Act. There were no other externally imposed capital requirements at the end of the reporting year.

The Bank’s equity is composed of the following elements, as shown below.

As at December 31	2019	2018
Share capital	5.0	5.0
Statutory reserve	25.0	25.0
Special reserve	100.0	100.0
Investment revaluation reserve	400.3	395.3
Retained earnings	-	-
Total equity	530.3	525.3

Share capital

The authorized capital of the Bank is $5.0 million divided into 100,000 shares with a par value of $50 each. The shares are fully paid and have been issued to the Minister of Finance, who holds them on behalf of the Government of Canada.

Statutory reserve

The statutory reserve was accumulated out of net income until it reached the stipulated maximum amount of $25.0 million in 1955, consistent with the requirement of section 27 of the Bank of Canada Act.

Special reserve

Following an amendment to section 27.1 of the Bank of Canada Act, the special reserve was created in 2007 to offset potential unrealized valuation losses due to changes in the fair value of the Bank’s investment portfolio. An initial amount of $100 million was established at that time, and the reserve is subject to a ceiling of $400 million.

The amount held in the special reserve is reviewed regularly for appropriateness using value-at-risk analysis and scenario-based stress tests and may be amended, pursuant to a resolution passed by the Board of Directors.

Investment revaluation reserve

The investment revaluation reserve represents the net unrealized fair value gains of the Bank’s financial assets classified and measured at FVOCI, which consist solely of the Bank’s investment in the BIS. The total reserve was $400.3 million as at December 31, 2019 ($395.3 million as at December 31, 2018).

Retained earnings

The net income of the Bank, less any allocation to reserves, is considered ascertained surplus and is transferred to the Receiver General for Canada, consistent with the requirement of section 27 of the Bank of Canada Act. Changes to the ascertained surplus payable to the Receiver General for Canada are presented in Note 14.

The Bank’s remittance agreement with the Minister of Finance was designed to enable the Bank to manage its equity requirements with consideration given to the volatility arising from fair value changes and remeasurements, which are recorded in other comprehensive income. This agreement allows the Bank to withhold from its remittance to the Receiver General for Canada any increase in cumulative net unrealized losses on financial assets that are classified and measured at FVOCI, unrealized remeasurements of the net defined-benefit liability/asset on defined-benefit plans, and other unrealized or non-cash losses arising from changes in accounting standards or legislation. Any decrease in previously withheld cumulative net unrealized non-cash losses is added to the remittance.

During 2019, the Bank withheld $133.4 million from its remittances to the Receiver General for Canada (in 2018, remitted $91.4 million). As at December 31, 2019, $188.3 million in withheld remittances was outstanding ($54.9 million as at December 31, 2018).

18. Related parties

Persons or entities are considered related parties to the Bank if they are:

under common ownership to the Government of Canada;
a post-employment benefit plan for the benefit of Bank employees; or
a member of key management personnel, which include members of the Executive Council, Senior Management Council or the Board of Directors, and their families.

Government of Canada

The Bank is related in terms of common ownership to all Government of Canada departments, agencies and Crown corporations. To achieve its monetary policy objectives, the Bank maintains a position of structural and functional independence from the Government of Canada through its ability to fund its own operations without external assistance and through its management and governance.

In the normal course of its operations, the Bank enters into transactions with related parties, and significant transactions and balances are presented in these financial statements. Not all transactions between the Bank and government-related entities have been disclosed, as permitted by the partial exemption available to wholly owned government entities in International Accounting Standard 24 Related Party Disclosures (IAS 24).

The Bank provides funds management, fiscal agent and banking services to the Government of Canada, as mandated by the Bank of Canada Act, and does not recover the costs of these services.

Bank of Canada Pension Plan

The Bank provides management, investment and administrative support to the Pension Plan. Services in the amount of $1.0 million ($1.0 million in 2018) were fully recovered from the Pension Plan in 2019. Disclosures related to the Bank’s post-employment benefit plans are included in Note 15.

Key management personnel and compensation

The key management personnel responsible for planning, directing and controlling the activities of the Bank are the members of the Executive Council, the Senior Management Council and the Board of Directors. The number of key management personnel as at December 31, 2019, was 29 (28 in 2018).

The compensation of key management personnel is presented in the following table. Short-term employee benefits and post-employment benefits apply to Bank employees only.

As at December 31	2019	2018
Salary and short-term employee benefits	6.4	5.9
Post-employment benefits	2.0	2.0
Directors’ fees	0.3	0.3
Total compensation	8.7	8.2

There were no other long-term employee benefit costs or termination benefits related to key management personnel in 2019 ($nil in 2018).

Footnotes

Footnote *

S.C. 2001, c. 6

Return to footnote * referrer

Footnote a

S.C. 2017, c. 20, subpar. 454(1)(h)(i)

Return to footnote a referrer

Footnote b

S.C. 2001, c. 27

Return to footnote b referrer

Footnote c

S.C. 2018, c. 27, s. 692

Return to footnote c referrer

Footnote d

S.C. 2005, c. 29, s. 18

Return to footnote d referrer

Footnote e

S.C. 2001, c. 26

Return to footnote e referrer

Footnote f

S.C. 2018, c. 27, s. 690

Return to footnote f referrer

Footnote 1

Canada Gazette, Part I, Vol. 153, No. 35, August 31, 2019

Return to footnote 1 referrer

Footnote 2

Canada Gazette, Part I, Vol. 153, No. 26, June 29, 2019

Return to footnote 2 referrer

Footnote 3

The effective interest method uses the rate inherent in a financial instrument that discounts the estimated future cash flows over the expected life of the financial instrument in order to recognize interest on a constant-yield basis.

Return to footnote 3 referrer

Canada Gazette, Part I, Volume 154, Number 19: GOVERNMENT NOTICES

DEPARTMENT OF CITIZENSHIP AND IMMIGRATION

IMMIGRATION AND REFUGEE PROTECTION ACT

Ministerial Instructions Amending the Ministerial Instructions Respecting the Agri-food Immigration Class (Subparagraph 2(3)(c)(v))

Ministerial Instructions Amending the Ministerial Instructions Respecting the Agri-food Immigration Class (Subparagraph 2(3)(c)(v))

Amendment

Taking Effect

DEPARTMENT OF CITIZENSHIP AND IMMIGRATION

IMMIGRATION AND REFUGEE PROTECTION ACT

Ministerial Instructions Amending the Ministerial Instructions Respecting the Home Child Care Provider Class and the Ministerial Instructions Respecting the Home Support Worker Class

Ministerial Instructions Amending the Ministerial Instructions Respecting the Home Child Care Provider Class and the Ministerial Instructions Respecting the Home Support Worker Class

Amendments

Ministerial Instructions Respecting the Home Child Care Provider Class

Ministerial Instructions Respecting the Home Support Worker Class

Taking effect

DEPARTMENT OF CITIZENSHIP AND IMMIGRATION

IMMIGRATION AND REFUGEE PROTECTION ACT

Ministerial Instructions with respect to the processing of certain new and existing applications for temporary residence to further support Government-wide measures to limit the spread of COVID-19 (Coronavirus)

Considerations

Scope

Applications submitted from outside Canada to be submitted by electronic means — Temporary residence

Temporary suspension on processing of certain applications for temporary resident visas and electronic travel authorizations for visitors

Retention/Disposition

Repeal

Effective period

DEPARTMENT OF TRANSPORT

CANADA SHIPPING ACT, 2001

Interim Order for the Protection of North Atlantic Right Whales (Eubalaena glacialis) in the Gulf of St. Lawrence

Interim Order for the Protection of North Atlantic Right Whales (Eubalaena glacialis) in the Gulf of St. Lawrence

Definitions

Application

Static Zones

Dynamic Shipping Zones

Seasonal Management Areas

General Speed Limit

Exception for Weather Conditions

Repeal

SCHEDULE

Zones and Areas

PART 1

Static Zones

Northern Static Zone

Southern Static Zone

PART 2

Dynamic Shipping Zones

Dynamic Shipping Zone A

Dynamic Shipping Zone B

Dynamic Shipping Zone C

Dynamic Shipping Zone D

Dynamic Shipping Zone E

PART 3

Seasonal Management Areas

Seasonal Management Area 1

Seasonal Management Area 2

DEPARTMENT OF TRANSPORT

MARINE LIABILITY ACT

Ship-source Oil Pollution Fund

DEPARTMENT OF TRANSPORT

MARINE LIABILITY ACT

Ship-source Oil Pollution Fund

OFFICE OF THE SUPERINTENDENT OF FINANCIAL INSTITUTIONS

BANK ACT

Schedules I, II and III

SCHEDULE I

SCHEDULE II

SCHEDULE III

Table 1 note(s)

BANK OF CANADA

FINANCIAL STATEMENTS DECEMBER 31, 2019

Financial Reporting Responsibility

Independent Auditors’ Report

Our opinion

Basis for opinion

Other matter

Other information

Responsibilities of management and those charged with governance for the financial statements

Auditors’ responsibilities for the audit of the financial statements

BANK OF CANADA

Statement of financial position

BANK OF CANADA