Canada Gazette, Part I, Volume 159, Number 25: SUPPLEMENT 1

June 21, 2025

SUPPLEMENT 1 Vol. 159, No. 25

Canada Gazette

Part I

OTTAWA, Saturday, June 21, 2025

BANK OF CANADA

FINANCIAL STATEMENTS
DECEMBER 31, 2024

Financial reporting responsibility

Management of the Bank of Canada (the Bank) is responsible for the financial statements, which are prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting 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, that liabilities are 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. The Board exercises this responsibility through its Audit and Finance Committee (the Committee). 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 2024 financial statements have been audited by the Bank’s independent auditors, Ernst & Young LLP and PricewaterhouseCoopers LLP, and their report is presented here. The independent auditors have full and unrestricted access to the Committee to discuss their audit and related findings.

Ottawa, Canada, February 20, 2025

Tiff Macklem
Governor

Coralia Bulhoes, CPA
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, 2024, and the statement of net loss and comprehensive loss, statement of changes in equity (deficiency) and statement of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as at December 31, 2024, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

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, 2023, were audited by Ernst & Young LLP and KPMG LLP, who expressed an unmodified opinion on those financial statements on February 22, 2024.

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 Annual Report 2024. 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 Accounting Standards, 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, 2025

Price Waterhouse Coopers LLP
Chartered Professional Accountants
Licensed Public Accountants

Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants

BANK OF CANADA

Statement of financial position
As at December 31 (in millions of Canadian dollars)

	Note	2024	2023
Assets
Cash and foreign deposits	3, 4, 6	20	14
Loans and receivables	3, 5, 6
Securities purchased under resale agreements		19,456	-
Other receivables		6	6
		19,462	6
Investments	3, 6
Government of Canada nominal bonds—carried at amortized cost		69,436	84,613
Government of Canada bonds—carried at fair value through profit and loss (FVTPL)		150,488	184,443
Canada Mortgage Bonds		5,600	6,685
Other bonds		6,997	8,357
Securities lent or sold under repurchase agreements		3,762	7,742
Shares in the Bank for International Settlements (BIS)		585	501
		236,868	292,341
Derivatives—indemnity agreements with the Government of Canada	3, 6	19,786	23,406
Capital assets	7
Property and equipment		514	515
Intangible assets		119	110
Right-of-use assets		34	39
		667	664
Other assets	8	440	345
Total assets		277,243	316,776
Liabilities and deficiency
Bank notes in circulation	3, 6, 9	121,298	119,430
Deposits	3, 6, 10
Government of Canada		28,551	63,511
Members of Payments Canada		124,419	120,567
Other deposits		11,389	12,134
		164,359	196,212
Securities sold under repurchase agreements	3, 6	-	6,638
Other liabilities	3, 6, 11, 12	298	342
Total liabilities		285,955	322,622
Commitments, contingencies and guarantees	13
Deficiency	14	(8,712)	(5,846)
Total liabilities and deficiency		277,243	316,776

Tiff Macklem
Governor

Coralia Bulhoes, CPA
Chief Financial Officer and Chief Accountant

Claire Kennedy
Lead Director, Board of Directors

Anne Whelan
Chair, Audit and Finance Committee

(See accompanying notes to the financial statements.)

BANK OF CANADA

Statement of net loss and comprehensive loss
For the year ended December 31 (in millions of Canadian dollars)

	Note	2024	2023
Loss before operating expenses Interest revenue
Investments—carried at amortized cost		1,378	1,599
Investments—carried at FVTPL		1,934	2,250
Securities purchased under resale agreements		307	-
Other interest revenue		1	1
		3,620	3,850
Interest expense
Deposits		(5,847)	(8,259)
Other		(170)	(567)
Net interest expense		(2,397)	(4,976)
Other revenue		23	14
Net gains and losses on financial instruments carried at FVTPL	3	-	-
Total loss before operating expenses		(2,374)	(4,962)
Operating expenses
Staff costs		403	340
Bank note research, production and processing		10	52
Premises costs		37	36
Technology and telecommunications		124	111
Depreciation and amortization		69	73
Other operating expenses		62	78
Total operating expenses		705	690
Net loss		(3,079)	(5,652)
Other comprehensive income (loss)
Remeasurements of the net defined-benefit liability/asset	12	129	(120)
Change in fair value of BIS shares	3	84	23
Other comprehensive income (loss)		213	(97)
Comprehensive loss		(2,866)	(5,749)

(See accompanying notes to the financial statements.)

Bank of Canada

Statement of changes in equity (deficiency)
For the year ended December 31 (in millions of Canadian dollars)

	Note	Share capital	Statutory reserve	Special reserve	Investment revaluation reserve	Actuarial gains reserve	Accumulated deficit	Total
Balance as at December 31, 2022		5	-	100	440	444	(1,086)	(97)
Comprehensive loss for the year
Net loss		-	-	-	-	-	(5,652)	(5,652)
Remeasurements of the net defined-benefit liability/asset	12	-	-	-	-	(120)	-	(120)
Change in fair value of BIS shares	3	-	-	-	23	-	-	23
Balance as at December 31, 2023		5	-	100	463	324	(6,738)	(5,846)
Comprehensive loss for the year
Net loss		-	-	-	-	-	(3,079)	(3,079)
Remeasurements of the net defined-benefit liability/asset	12	-	-	-	-	129	-	129
Change in fair value of BIS shares	3	-	-	-	84	-	-	84
Balance as at December 31, 2024		5	-	100	547	453	(9,817)	(8,712)

(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)

	2024	2023
Cash flows from operating activities
Interest received	5,304	6,039
Other revenue received	23	13
Interest paid	(6,057)	(8,816)
Payments to or on behalf of employees and to suppliers	(600)	(630)
Net decrease in deposits	(31,853)	(77,121)
Net acquisition of securities purchased under resale agreements	(19,456)	-
Net payments from securities sold under repurchase agreements	(6,638)	(10,758)
Proceeds from maturity of Government of Canada bonds—carried at FVTPL	39,751	64,340
Proceeds from maturity of other bonds	2,376	2,840
Proceeds from disposal of other bonds	-	1
Net cash used in operating activities	(17,150)	(24,092)
Cash flows from investing activities
Proceeds from maturity of Government of Canada nominal bonds	15,116	24,209
Proceeds from maturity of Canada Mortgage Bonds	250	250
Additions of property and equipment	(45)	(37)
Additions of intangible assets	(28)	(29)
Net cash provided by investing activities	15,293	24,393
Cash flows from financing activities
Net increase (decrease) in bank notes in circulation	1,868	(296)
Payments on lease liabilities	(5)	(5)
Net cash provided by (used in) financing activities	1,863	(301)
Increase in cash and foreign deposits	6	-
Cash and foreign deposits, beginning of year	14	14
Cash and foreign deposits, end of year	20	14

(See accompanying notes to the financial statements.)

Notes to the financial statements of the Bank of Canada

For the year ended December 31, 2024.

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. Its mandate is to promote the economic and financial welfare of Canada. The Bank’s activities and operations are undertaken in support of this mandate and not with the objective of generating revenue or profits. The address of the Bank’s registered head office is 234 Wellington Street, Ottawa, Ontario.

The Bank’s five core functions 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.
• Retail payments supervision: Effective November 1, 2024, the Bank supervises payment service providers to build confidence in the safety and reliability of their services and protect users from specific risks.
• Currency: The Bank has the exclusive right to issue Canadian bank notes. It designs, issues and distributes Canada’s bank notes, oversees the note distribution system and ensures a supply of quality notes that are readily accepted and secure against counterfeiting.

The face value of the bank notes is a liability on the Bank’s balance sheet. The Bank invests the proceeds from issuing bank notes by purchasing assets and generates interest income, referred to as seigniorage, on these assets. This income provides a stable and constant source of funding for the Bank’s operations and enables the Bank to function independently of government appropriations. When the Bank generates net income, it makes remittances to the Receiver General for Canada in accordance with the requirements of the Bank of Canada Act and the Budget Implementation Act, 2023, No. 1, as described in Note 14.

2. Basis of preparation

Compliance with accounting standards

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 and, as such, it adheres to the standards applicable to publicly accountable enterprises. In compliance with this requirement, these financial statements have been prepared in accordance with IFRS Accounting Standards. The Board of Directors approved the financial statements on February 20, 2025.

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 its 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. Also in this role, 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 15.

The Bank provides securities safekeeping and other custodial services 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.

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.

Material accounting policies

This section contains the Bank’s material 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 using the effective interest method.
• Other revenue is recognized as it is earned, when it can be reliably measured and when collectibility 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 in effect 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 fair value through other comprehensive income (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 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 annually for impairment.

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. 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 regularly reviewed for appropriateness and consistent application. 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 3B) and employee benefits (Note 12).

Current changes to International Financial Reporting Standards

No new or amended standards were adopted by the Bank in 2024 that had a material impact on its financial statements.

Future changes to International Financial Reporting Standards

In April 2024, the International Accounting Standards Board issued the final version of IFRS 18 Presentation and disclosure in the financial statements (IFRS 18), which will replace IAS 1 Presentation of financial statements. IFRS 18 includes requirements for all entities applying IFRS Accounting Standards for the presentation and disclosure of information in financial statements. IFRS 18 applies to an annual reporting period beginning on or after January 1, 2027. The Bank is currently determining the impact of this standards on its financial statements.

No other new or amended standards issued but not yet effective are expected to have a material impact on the Bank’s financial statements.

3. Financial instruments

A) 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 instruments as at December 31, 2024	Classification and subsequent measurement	Carrying value	Fair value
Financial assets
Cash and foreign deposits	Amortized cost	20	table a5 note *
Loans and receivables
Securities purchased under resale agreements	Amortized cost	19,456	table a5 note *
Other receivables	Amortized cost	6	table a5 note *
		19,462	table a5 note *
Investments
Government of Canada nominal bonds—primary market	Amortized cost	69,436	64,494
Government of Canada bonds—secondary market
Nominal bonds	FVTPL	146,127	146,127
Real return bonds	FVTPL	4,361	4,361
		150,488	150,488
Canada Mortgage Bonds	Amortized cost	5,600	5,290
Other bonds
Provincial bonds	FVTPL	6,975	6,975
Corporate bonds	FVTPL	22	22
		6,997	6,997
Securities lent or sold under repurchase agreements
Government of Canada nominal bonds—secondary market	FVTPL	2,796	2,796
Provincial bonds	FVTPL	966	966
		3,762	3,762
Shares in the BIS	FVOCI	585	585
		236,868	231,616
Derivatives—indemnity agreements with the Government of Canada	FVTPL	19,786	19,786
Financial liabilities
Bank notes in circulation	Face value	121,298	table a5 note *
Deposits	Amortized cost	164,359	table a5 note *
Other financial liabilities	Amortized cost	107	table a5 note *
Table a5 note(s) Table a5 note * Approximates carrying value due to their nature or term to maturity Return to table a5 note * referrer

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. The Bank’s objective is to hold the financial assets in order to collect contractual cash flows. 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 held at other central banks or international financial institutions. They are principally held for cash flow management purposes and are managed by collecting contractual cash flows.

Securities purchased under resale agreements (SPRAs), Other receivables, Government of Canada nominal bonds—primary market and Canada Mortgage Bonds are debt instruments that are managed by collecting contractual cash flows. They are measured at amortized cost using the effective interest method less any ECLs.^{footnote 1}

Financial assets designated at FVTPL

Government of Canada bonds—secondary market (nominal bonds and real return bonds), provincial bonds and corporate bonds are debt instruments whose business objective is achieved by both collecting contractual cashflows and selling financial assets. The Bank has elected to irrevocably designate these at FVTPL to reduce the accounting mismatch arising from the derivative-related indemnity agreement on each of these instruments. Changes in fair value as well as any gains or losses realized on disposal are recognized in income (loss). Amounts relating to fair value changes and realized gains and losses can be found in Note 3C. The Bank has also elected to present interest income and expense resulting from these instruments separate from net gains and losses. Interest is calculated using the effective interest method.

Effective October 2, 2024, the Bank restarted its Securities Lending Program, which provides a temporary source of Government of Canada nominal bonds and treasury bills (if the Bank holds any) to primary dealers to support liquidity in the securities financing market. The Bank also operates a securities-lending program for provincial bonds purchased under the Provincial Bond Purchase Program. For both these programs, the Bank enters into arrangements to lend securities against non-cash collateral, with the agreement to receive the securities back at a future date, thereby substantially retaining all the risks and rewards of ownership. As a result, the securities do not qualify for derecognition and remain on the statement of financial position.

Derivatives—indemnity agreements with the Government of Canada consists of agreements that were entered into to address market fluctuations as a result of the Bank’s operations under the Government of Canada Bond Purchase program, the Provincial Bond Purchase Program and the Corporate Bond Purchase Program. Realized losses resulting from the sale of assets within these programs are indemnified by the Government of Canada, whereas realized gains on disposal are remitted. Given that the value of the agreements responds to changes in the underlying prices of the instruments in the programs, the indemnity agreements are considered derivatives. These agreements are initially recognized and carried at their fair value on the statement of financial position with changes in fair value recognized in income (loss). The fair value of these derivatives is calculated as the difference between the fair value of the related instruments and their amortized cost.

Financial assets designated at FVOCI

The Bank holds 9,441 shares in the Bank for International Settlements (BIS) (9,441 BIS shares as at December 31, 2023) as part of its functions as a central bank. These shares are long-standing in nature. Ownership of BIS shares is limited to central banks, and new shares can be acquired only by invitation from the BIS Board of Directors to subscribe. The shares are non-transferable without prior written consent from the BIS. The Bank’s business model is to hold these shares to enable its participation as a member of the BIS.

The shares in the BIS are not held for trading. 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 Deficiency. Dividends are recognized in net income as 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. It also includes unclaimed balances remitted to the Bank in accordance with governing legislation. The Bank pays interest on the deposits of members of Payments Canada and some other financial institutions at short-term market rates. Effective May 16, 2022, Government of Canada deposits ceased accruing interest. The Bank pays interest on unclaimed balances in accordance with governing legislation. Interest expense on deposits is recognized on an accrual basis and included in net income. Deposits are managed by paying contractual cash flows and are measured at amortized cost using the effective interest method.

Securities sold under repurchase agreements stems from the Bank’s securities repo operations and the overnight reverse repo operations. The Bank’s securities repos were introduced in July 2020 to support liquidity in the securities financing market and were discontinued in October 2024 when the Securities Lending Program was reintroduced. The overnight reverse repos were introduced on March 3, 2022, to support the effective implementation of monetary policy by withdrawing intraday liquidity. Under the overnight reverse repos operations, the Bank enters into sale and repurchase agreements for Government of Canada securities, whereby the securities are sold and repurchased the following day. Under such transactions, the Bank retains substantially all the risks and rewards associated with the assets. Where financial assets are not eligible for derecognition, the transfers are viewed as secured financing transactions, with any consideration received resulting in a corresponding liability measured at amortized cost. The Bank is not entitled to use these financial assets for any other purpose.

Other financial liabilities consists of accounts payable and accrued liabilities.

Impairment and writeoff

The Bank calculates ECLs on investments in debt instruments that are measured at amortized cost and on foreign currency swap facility commitments. The amount of ECLs is updated at each reporting date to reflect changes in credit risk since initial recognition. The ECL is 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 ECL model is a function of the probability of default, loss given default, and exposure at default of an issuer, discounted to the reporting date using the effective interest rate. Instruments are grouped on a collective basis by counterparty and instrument type for evaluation of the ECL.

Key concepts

Probability of default

The likelihood that a borrower would not be able to meet its scheduled repayments.

Loss given default

The amount of the loss the Bank would likely incur if a borrower defaulted on a loan, expressed as a percentage of exposure at default.

Low credit risk

The Bank has applied the practical expedient available under IFRS 9 to applicable low-credit-risk financial assets. The Bank considers a financial asset to have a 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; and (3) existing or forecast adverse changes in the business, financial, regulatory, technological or economic environment of the counterparty that result in a significant decrease in the counterparty’s ability to meet its debt obligations.

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 a low credit risk at the reporting date and monitoring activities do not indicate the presence of a trigger event. The Bank corroborates external credit ratings with an internal analysis performed annually, with quarterly updates. The Bank also performs continuous monitoring of relevant economic and financial developments.

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; and (3) the likelihood that the counterparty will enter bankruptcy or other financial reorganization.

Default

The Bank considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Bank in full, without recourse by the Bank, such as realizing collateral (if held).

The ECL model applies a three-stage approach to measure the allowance for credit losses. Expected credit losses are measured based on the stage assignment of the financial instrument:

• 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.

Fair value hierarchy of financial instruments

Financial instruments 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 as a result of inactive markets (e.g., market participant assumptions)

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. 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. Transfers may occur between levels of the fair value hierarchy as a result of changes in market activity or the availability of quoted market prices or observable inputs. The Bank’s policy is to record transfers of assets and liabilities between the different levels of the fair value hierarchy using the fair values as at the end of each reporting period.

B) Accounting estimates and judgments

Expected credit losses

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.

In certain cases, the Bank may consider that events result in 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.

Significant judgments required for measuring ECLs include the following:

• determining criteria for assessing whether a financial asset is considered to have a low credit risk
• determining criteria for assessing what constitutes a significant increase in credit risk
• determining appropriate data inputs for probability of default, loss given default and exposure at default

All of the Bank’s financial assets subject to impairment assessments are Stage 1 and considered to have a low credit risk. There were no transfers of financial instruments between stages during the reporting period. The Bank did not record any ECLs on these financial instruments as at December 31, 2024 ($nil as at December 31, 2023) because the amount was deemed not to be material. By their nature, the ECL estimates are subject to measurement uncertainty. The Bank will continue to review its judgments and assumptions to assess whether the ECL estimate has changed. There are no significant past due or impaired amounts as at December 31, 2024 ($nil as at December 31, 2023).

Loan commitments

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

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, 2024, no ECL had been recorded because none of the Bank’s 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, 2023).

Fair value of financial instruments

Where observable prices or inputs are not available, judgment is required to determine fair values by assessing other relevant sources of information. The fair value of the BIS shares is determined using significant unobservable inputs (Level 3). It is estimated as 70% 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.

C) Supporting information

Fair value of financial instruments

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 year.

Derivatives—indemnity agreements with the Government of Canada

Calculated using market prices derived from observable inputs (Level 2)

The fair value of the derivatives is calculated as the difference between the amortized cost of the underlying instruments in the programs and their fair value. The Bank expects the value of the derivatives to fluctuate over time, moving in the opposite direction of the fair value movements of the underlying instruments.

Cash and foreign deposits, SPRAs, other receivables, deposits, securities sold under repurchase agreements and other financial liabilities

Carrying amount (approximation to fair value assumed due to their nature or term to maturity)

Government of Canada nominal bonds, Government of Canada real return bonds, Canada Mortgage Bonds, provincial bonds, corporate bonds and securities lent or sold under repurchase agreements

Prices observed in active markets (Level 1), or market prices derived from observable inputs (Level 2)

The following table shows the fair value of the Bank’s financial assets classified in accordance with the fair value hierarchy described above. Some of the balances in this table do not correspond to the balances in the statement of financial position because certain financial assets are measured at amortized cost.

	Level 1	Level 2	Level 3	Total
As at December 31, 2024
Government of Canada nominal bonds—primary market	-	64,494	-	64,494
Government of Canada nominal bonds—secondary market	-	146,127	-	146,127
Government of Canada real return bonds	-	4,361	-	4,361
Canada Mortgage Bonds	-	5,290	-	5,290
Provincial bonds	-	6,975	-	6,975
Corporate bonds	-	22	-	22
Securities lent or sold under repurchase agreements
Government of Canada nominal bonds—secondary market	-	2,796	-	2,796
Provincial bonds	-	966	-	966
Shares in the BIS	-	-	585	585
Total	-	231,031	585	231,616

The table below presents the comparative fair value as at December 31, 2023.

	Level 1	Level 2	Level 3	Total
As at December 31, 2023
Government of Canada nominal bonds—primary market	-	78,969	-	78,969
Government of Canada nominal bonds—secondary market	-	180,156	-	180,156
Government of Canada real return bonds	-	4,287	-	4,287
Canada Mortgage Bonds	-	6,164	-	6,164
Provincial bonds	-	8,286	-	8,286
Corporate bonds	-	71	-	71
Securities lent or sold under repurchase agreements
Government of Canada nominal bonds—secondary market	-	6,652	-	6,652
Provincial bonds	-	1,090	-	1,090
Shares in the BIS	-	-	501	501
Total	-	285,675	501	286,176

Transfers of securities measured at fair value may occur between levels of the fair value hierarchy as a result of changes in market activity or the availability of quoted market prices or observable inputs. The Bank’s policy is to record transfers of assets between the different levels of the fair value hierarchy using the fair values as at the end of each quarterly reporting period. No transfers occurred between levels of the fair value hierarchy during 2024.

The table below presents the comparative figures for 2023.

	Level 2 to Level 1	Level 1 to Level 2
Government of Canada nominal bonds—secondary market	212,704	209,509
Government of Canada real return bonds	3,827	3,762
Provincial bonds	6,975	6,793
Total	223,506	220,064

Shares in the Bank for International Settlements

The following table reconciles the opening and closing balances of the BIS shares.

	2024	2023
Opening balance at beginning of year	501	478
Change in fair value recorded through other comprehensive income	56	30
Change due to exchange differences in special drawing rights recorded through other comprehensive income	28	(7)
Closing balance at end of year	585	501

Derivatives—indemnity agreements with the Government of Canada

	Related asset		Derivatives—indemnity agreements with the Government of Canada	Derivative asset position	Derivative liability position
	Amortized cost	Fair value	Fair value	Fair value	Fair value
Government of Canada bonds—secondary market	172,600	153,284	19,316	19,316	-
Provincial bonds	8,411	7,941	470	470	-
Corporate bonds	22	22	-	-	-
Balance as at December 31, 2024	181,033	161,247	19,786	19,786	-

The table below presents the comparative values as at December 31, 2023.

	Related asset		Derivatives—indemnity agreements with the Government of Canada	Derivative asset position	Derivative liability position
	Amortized cost	Fair value	Fair value	Fair value	Fair value
Government of Canada bonds—secondary market	213,713	191,095	22,618	22,618	-
Provincial bonds	10,162	9,376	786	786	-
Corporate bonds	73	71	2	2	-
Balance as at December 31, 2023	223,948	200,542	23,406	23,406	-

Net unrealized losses (gains) on financial instruments carried at FVTPL

For the year ended December 31	2024	2023
Government of Canada bonds—secondary market	(3,302)	(7,569)
Provincial bonds	(316)	(368)
Corporate bonds	(2)	(3)
Derivatives—indemnity agreements	3,620	7,940
Total	-	-

Net unrealized gains and losses arising from financial instruments carried at FVTPL during the year are equal to the change in fair value of the derivatives shown in the tables above. There were no realized gains and losses in the year (negligible in 2023).

4. Cash and foreign deposits

Composition of cash and foreign deposits

As at December 31	2024	2023
Cash on hand	13	9
Foreign deposits	7	5
Total cash and foreign deposits	20	14

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3A, and related financial risks are discussed in Note 6.

5. Loans and receivables

Loans and receivables is composed of SPRAs in the form of overnight repos, which matured on January 2, 2025, and of trade receivables. The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3A, and related financial risks are discussed in Note 6.

6. 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 risks. 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 as well as through market transactions in the form of SPRAs and loans of securities, if any. 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 the execution of foreign currency contracts. The maximum exposure under guarantees and foreign currency contracts is discussed in Note 13. There are no past due or impaired amounts.

Concentration of credit risk

For SPRAs, collateral is taken in accordance with the Bank’s publicly disclosed eligibility criteria and margin requirements, both of which are available 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. The Bank monitors collateral positions regularly and requires counterparties to pledge additional collateral as risk increases. The fair value of collateral pledged to the Bank against these financial instruments as at December 31, 2024, was $19,713 million, representing 101% of the carrying value of the collateralized securities ($nil as at December 31, 2023).

The Bank’s investment portfolio represents 85% of the carrying value of its total assets (92% as at December 31, 2023). The credit risk associated with this portfolio is low. This is because the Bank’s 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 with most credit agencies and has no history of default.

As at December 31, 2024, the Bank’s investments included securities lent in the form of Government of Canada bonds and provincial bonds with a fair market value of $3,762 million ($1,090 million as at December 31, 2023). The fair value of collateral held totalled $3,811 million, representing 101% of the fair value of the securities loaned ($1,143 million as at December 31, 2023, representing 105%).

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. These instruments are subject to variable interest rates. The Bank also carries interest rate risk associated with fluctuations in future cash flows from Government of Canada real return bonds, which are linked to inflation. The remainder of the Bank’s financial assets and liabilities either have fixed interest rates or are non-interest-bearing, including Government of Canada deposits, which ceased accruing interest effective May 16, 2022.

The table below shows the effect of an increase (decrease) in interest rates of 25 basis points on the interest expense or revenue on Government of Canada real return bonds, deposits of members of Payments Canada and other deposits. This represents substantially all the Bank’s interest rate risk exposure.

For the year ended December 31	2024	2023
Interest revenue on Government of Canada real return bonds	13 / (13)	13 / (13)
Interest expense on deposits from members of Payments Canada	299 / (299)	416 / (416)
Interest expense on other deposits	28 / (28)	27 / (27)

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. The currency risk is not considered to be significant because the Bank’s net foreign currency exposure relative to its total assets is small.

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 because of 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. The fair value of these shares is estimated based on the net asset value of the BIS, less a discount of 30%. Accordingly, the fair value fluctuations of these shares reflect movements in the net asset value of the BIS and in exchange rates.

The securities held at FVTPL expose the Bank to fluctuations in market prices. However, all these securities are fully indemnified for realized losses beyond amortized cost, while realized gains are fully remitted back to the Government of Canada. Fluctuations in market prices for the FVTPL instruments are offset by equivalent fair value fluctuations of the derivatives. Therefore, the Bank bears no net price risk related to the securities.

Liquidity risk

Liquidity risk is the potential for loss if the Bank is unable to meet its financial obligations as they become due. Liabilities due on demand include bank notes in circulation, Government of Canada deposits and other deposits, with the remaining liabilities (deposits of members of Payments Canada, securities sold under repurchase agreements and other financial liabilities) due within 90 days.

Bank notes in circulation provide a stable source of long-term funding for the 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. When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the end of the reporting period.

As at December 31, 2024	Due on demand	Within 90 days	Within 4 to 12 months	Within 1 to 5 years	In more than 5 years	Total
Financial assets
Cash and foreign deposits	20	-	-	-	-	20
Loans and receivables	-	19,462	-	-	-	19,462
Investments
Government of Canada nominal bonds at amortized cost	-	2,243	10,579	23,636	44,796	81,254
Government of Canada nominal bonds at FVTPL	-	10,034	24,368	59,905	90,402	184,709
Government of Canada real return bonds	-	-	112	1,156	3,850	5,118
Canada Mortgage Bonds	-	24	1,022	4,445	272	5,763
Provincial bonds	-	158	1,734	4,886	1,965	8,743
Corporate bonds	-	10	13	-	-	23
Shares in the BIS table b10 note *	585	-	-	-	-	585
	605	31,931	37,828	94,028	141,285	305,677
Financial liabilities
Bank notes in circulation	(121,298)	-	-	-	-	(121,298)
Deposits
Government of Canada	(28,551)	-	-	-	-	(28,551)
Members of Payments Canada	-	(124,419)	-	-	-	(124,419)
Other deposits	(11,389)	-	-	-	-	(11,389)
Securities sold under repurchase agreements	-	-	-	-	-	-
Other financial liabilities	-	(107)	-	-	-	(107)
	(161,238)	(124,526)	-	-	-	(285,764)
NET MATURITY DIFFERENCE	(160,633)	(92,595)	37,828	94,028	141,285	19,913
Table b10 note(s) Table b10 note * The Bank’s investment in shares in the Bank for International Settlements (BIS) has no fixed maturity. Return to table b10 note * referrer

Cash flows associated with the indemnity agreements are settled monthly after disposition of related securities. Where securities are held to maturity, no cash flows are associated with the indemnity agreements. As at December 31, 2024, the Bank had not disposed of any securities related to the indemnity agreements that had not been settled, and, therefore, no indemnity agreement cash flows are presented above ($nil as at December 31, 2023).

The table below presents the comparative maturity analysis as at December 31, 2023.

As at December 31, 2023	Due on demand	Within 90 days	Within 4 to 12 months	Within 1 to 5 years	In more than 5 years	Total
Financial assets
Cash and foreign deposits	14	-	-	-	-	14
Loans and receivables	-	6	-	-	-	6
Investments
Government of Canada nominal bonds at amortized cost	-	3,123	13,373	31,950	49,304	97,750
Government of Canada nominal bonds at FVTPL	-	7,440	35,390	83,333	101,376	227,539
Government of Canada real return bonds	-	-	110	1,167	3,851	5,128
Canada Mortgage Bonds	-	24	1,120	4,852	912	6,908
Provincial bonds	-	216	1,641	5,227	3,516	10,600
Corporate bonds	-	17	34	22	-	73
Shares in the BIS table b11 note *	501	-	-	-	-	501
	515	10,826	51,668	126,551	158,959	348,519
Financial liabilities
Bank notes in circulation	(119,430)	-	-	-	-	(119,430)
Deposits
Government of Canada	(63,511)	-	-	-	-	(63,511)
Members of Payments Canada	-	(120,567)	-	-	-	(120,567)
Other deposits	(12,134)	-	-	-	-	(12,134)
Securities sold under repurchase agreements	-	(6,638)	-	-	-	(6,638)
Other financial liabilities	-	(138)	-	-	-	(138)
	(195,075)	(127,343)	-	-	-	(322,418)
NET MATURITY DIFFERENCE	(194,560)	(116,517)	51,668	126,551	158,959	26,101
Table b11 note(s) Table b11 note * The Bank’s investment in shares in the Bank for International Settlements (BIS) has no fixed maturity. Return to table b11 note * referrer

7. Capital assets

Capital assets consists of property and equipment, intangible assets and right-of-use assets.

Accounting policy

Property and equipment consists of land, buildings, computer equipment and other equipment. It 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. Depreciation is calculated using the straight-line method and is applied over the estimated useful life of the assets. The estimated useful life 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 life for major asset classes is as follows:

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

Leasehold improvements are depreciated over the lesser of their useful life or the term of the lease.

Intangible assets are identifiable non-monetary assets without physical substance that represent future economic benefits and are controlled by the Bank. They consist of computer software that has been developed internally or acquired externally. 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 in the specific asset. Computer software assets that are acquired by the Bank and have a finite useful life 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 life 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.

Right-of-use assets is composed of leases for 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). 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 of time in exchange for consideration. Right-of-use assets are depreciated over the lesser of the end of the useful life of the right-of-use 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 asset may be reassessed 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 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.

Supporting information

	Land and buildings	Computer equipment	Property and equipment		Intangible assets	Right-of-use assets	Total
			Other equipment	Total
Cost
Balances as at December 31, 2022	567	160	117	844	205	63	1,112
Additions	6	16	15	37	29	-	66
Disposals	-	(6)	(4)	(10)	(5)	-	(15)
Transfers to other asset categories	-	-	-	-	-	-	-
Balances as at December 31, 2023	573	170	128	871	229	63	1,163
Additions	12	18	15	45	28	-	73
Disposals	(1)	(33)	(7)	(41)	(21)	(1)	(63)
Transfers to other asset categories	-	-	-	-	-	-	-
Balances as at December 31, 2024	584	155	136	875	236	62	1,173
Accumulated depreciation / amortization
Balances as at December 31, 2022	(170)	(104)	(48)	(322)	(100)	(19)	(441)
Depreciation expense	(18)	(18)	(8)	(44)	(24)	(5)	(73)
Disposals	-	6	4	10	5	-	15
Transfers to other asset categories	-	-	-	-	-	-	-
Balances as at December 31, 2023	(188)	(116)	(52)	(356)	(119)	(24)	(499)
Depreciation expense	(18)	(19)	(9)	(46)	(19)	(4)	(69)
Disposals	1	33	7	41	21	-	62
Transfers to other asset categories	-	-	-	-	-	-	-
Balances as at December 31, 2024	(205)	(102)	(54)	(361)	(117)	(28)	(506)
Carrying amounts
Balances as at December 31, 2023	385	54	76	515	110	39	664
Balances as at December 31, 2024	379	53	82	514	119	34	667
Projects in progress
Included in Carrying amounts at December 31, 2023	4	17	10	31	8	-	39
Commitments at December 31, 2023	1	3	8	12	5	-	17
Included in Carrying amounts at December 31, 2024	8	13	4	25	2	-	27
Commitments at December 31, 2024	1	2	2	5	4	-	9

8. 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 benefit plans; and all other non-financial assets, which are primarily prepaid expenses.

Accounting policy

Bank note inventory is measured at the lesser 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 expensed in the period in which the services are received.

The accounting policy for the net defined-benefit asset related to the Bank of Canada Pension Plan (Pension Plan) is discussed in Note 12.

Supporting information

Composition of other assets

As at December 31	Note	2024	2023
Bank note inventory		3	-
Net defined-benefit asset	12	387	307
All other assets		50	38
Total other assets		440	345

9. 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 6.

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 listed in the table below, are denominations that are still in circulation but no longer issued.

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

As at December 31	2024	2023
$5	1,874	1,802
$10	1,776	1,733
$20	19,429	20,218
$50	22,011	20,958
$100	75,362	73,857
Other bank notes	846	862
Total	121,298	119,430

10. Deposits

Deposits is composed of deposits by the Government of Canada, members of Payments Canada and others.

Deposits from the Government of Canada consist of $8,551 million for operational balances and $20,000 million held for the prudential liquidity-management plan ($43,511 million and $20,000 million, respectively, as at December 31, 2023). Deposits from members of Payments Canada are composed of deposits from domestic banks, authorized foreign banks and other deposit-taking institutions. Other deposits is composed of due-on-demand deposits from financial market infrastructure institutions, other central banks, government institutions and foreign official institutions as well as unclaimed balances. Some of the deposits are interest-bearing, depending on the agreement between the Bank and the depositor.

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3A, and related financial risks are discussed in Note 6.

11. Other liabilities

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

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 3A, and related financial risks are discussed in Note 6. 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 12. The Bank’s accounting policy for the lease liabilities is discussed in Note 7.

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 date of the statement of financial position and it is probable that an outflow of economic benefits will be required to settle the obligation.

Supporting information

Composition of other liabilities

As at December 31	Note	2024	2023
Net defined-benefit liability	12
Pension benefit plans		-	6
Other benefit plans		154	155
Lease liabilities		37	42
All other liabilities		107	139
Total other liabilities		298	342

Carrying amount of lease liabilities

	Data centres	Offices	Other	Total
Balances as at December 31, 2022	26	20	1	47
Finance charges	1	-	-	1
New lease liabilities	-	-	-	-
Lease payments	(4)	(2)	-	(6)
Other adjustments	-	-	-	-
Balance as at December 31, 2023	23	18	1	42
Finance charges	1	-	-	1
New lease liabilities	-	-	-	-
Lease payments	(3)	(1)	(1)	(5)
Other adjustments	-	(1)	-	(1)
Balance as at December 31, 2024	21	16	-	37

During the year, the Bank recognized a negligible amount 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, 2024	Data centres	Offices	Other	Total
Less than 5 years	15	8	-	23
Between 5 and 10 years	6	8	-	14
Between 10 and 15 years	-	5	-	5
More than 15 years	-	-	-	-
Total	21	21	-	42

12. Employee benefits

The Bank provides employees with several employee benefit plans, consisting of short-term and long-term employee benefits, post-employment benefits and termination benefits. The Pension Plan was established under the provisions of the Bank of Canada Act 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 delegated to it the responsibility for carrying out the Bank’s administrator duties. These duties include 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. These benefits are 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 c6 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 c6 note † are recognized immediately in other comprehensive income in the reporting period in which they occur and are accumulated in Deficiency. 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 c6 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 c6 note(s) Table c6 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 c6 note * referrer Table c6 note † The current service costs and the benefit obligations of the plans are actuarially determined using the projected unit credit method. Return to table c6 note † referrer

Accounting estimates and judgments

The cost of the defined-benefit pension plans, the cost of 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. These assumptions may differ from future developments. The significant assumptions used are as follows (on a weighted-average basis):

As at December 31	Pension benefit plans		Other benefit plans
	2024	2023	2024	2023
Defined-benefit obligation
Discount rate table c7 note *	4.80%	4.60%	4.68%	4.60%
Inflation rate table c7 note †	2.00%	2.60% for 2024 2.00% thereafter	n.a.	n.a.
Rate of compensation increase	2.75% + merit	2.75% + merit	2.75% + merit	2.75% + merit
Mortality table table c7 note ‡	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)
Benefit plan expense
Discount rate table c7 note *	4.60%	5.10%	4.60%	5.08%
Inflation rate table c7 note †	2.50% for 2024 2.00% thereafter	3.80% for 2023 2.00% thereafter	n.a.	n.a.
Rate of compensation increase	2.75% + merit	2.75% + merit	2.75% + merit	2.75% + merit
Assumed medical cost trend
Initial medical cost trend rate	n.a.	n.a.	4.82%	5.04%
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 c7 note(s) Table c7 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 16 to 17 years for the pension benefit plans (16 to 17 years in 2023) and from 4 to 21 years for the other benefit plans (from 4 to 21 years in 2023). Return to table c7 note * referrer Table c7 note † Other benefit plans does not include an inflation rate adjustment since the adjustment is a component of the assumed medical cost trend. Return to table c7 note † referrer Table c7 note ‡ In 2024, the assumption for life expectancy for the plan valuations assumes that a male member reaching 60 will live for approximately 29 years (28 years in 2023) and a female member approximately 30 years (30 years in 2023). Return to table c7 note ‡ referrer

The most recent actuarial valuation for the purposes of funding the Pension Plan was done as at January 1, 2024, and the next valuation will be as at January 1, 2025. 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.

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.

	Increase (decrease) in obligation table c8 note *
	Pension benefit plans	Other benefit plans
Discount rate
Impact of 0.10% increase	(33)	(2)
Impact of 0.10% decrease	34	2
Rate of compensation increase
Impact of 0.10% increase	7	-
Impact of 0.10% decrease	(7)	-
Mortality rate
Impact of 10.00% increase	(41)	(1)
Impact of 10.00% decrease	45	1
Inflation rate
Impact of 0.10% increase	29	n.a.
Impact of 0.10% decrease	(28)	n.a.
Medical cost trend rates
Impact of 1.00% increase	n.a.	22
Impact of 1.00% decrease	n.a.	(17)
Table c8 note(s) Table c8 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 c8 note * referrer

Supporting information

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

	Pension benefit plans		Other benefit plans
	2024	2023	2024	2023
Fair value of plan assets
Fair value of plan assets as at January 1	2,345	2,215	-	-
Interest income	106	112	-	-
Remeasurement gains (losses)
Return on plan assets table c9 note *	89	43	-	-
Bank contributions	8	22	-	-
Employee contributions	29	29	-	-
Benefit payments and transfers	(81)	(73)	-	-
Administration costs	(3)	(3)	-	-
Fair value of plan assets as at December 31	2,493	2,345	-	-
Defined-benefit obligation
Benefit obligation as at January 1	2,044	1,801	155	146
Current service cost	52	38	4	4
Interest cost	97	92	7	7
Past service cost	-	-	1	1
Employee contributions	29	29	-	-
Remeasurement (gains) losses
Arising from changes in demographic and economic assumptions	(4)	(11)	-	-
Arising from changes in experience	37	8	-	-
Arising from changes in financial assumptions	(68)	160	(5)	5
Benefit payments and transfers	(81)	(73)	(8)	(8)
Defined-benefit obligation as at December 31	2,106	2,044	154	155
Net defined-benefit asset (liability)	387	301	(154)	(155)
Net defined-benefit asset	387	307	-	-
Net defined-benefit liability	-	(6)	(154)	(155)
Net defined-benefit asset (liability)	387	301	(154)	(155)
Benefit plan expenses recognized in net income	45	21	12	12
Remeasurement gains (losses) recognized in other comprehensive income	124	(114)	5	(6)
Table c9 note(s) Table c9 note * The return on plan assets includes a $29 million gain, of which $26 million is unrealized, ($8 million unrealized loss in 2023) due to changes in foreign exchange rates. Return to table c9 note * referrer

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

As at December 31	Pension benefit plans		Other benefit plans
	2024	2023	2024	2023
Membership category
Active members	857	829	68	69
Pensioners	1,147	1,116	86	86
Deferred members	102	99	-	-
Total defined-benefit obligation	2,106	2,044	154	155

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

As at December 31	Pension benefit plans		Other benefit plans
	2024	2023	2024	2023
Cumulative remeasurement gains (losses), beginning of year	180	294	24	30
Remeasurement gains (losses) recognized in current year	124	(114)	5	(6)
Cumulative remeasurement gains, end of year	304	180	29	24

Pension benefit plans asset mix

The pension plans’ SIPPs require that investments be held in a diversified mix of asset types and 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 four 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 2022.

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 assets of the pension plans consist of the following:

	2024				2023
As at December 31	Quoted	Unquoted	Total	%	Quoted	Unquoted	Total	%
Money market instruments	28	-	28	1	32	-	32	1
Equity instruments
Canadian equity funds	326	-	326	13	268	-	268	11
Foreign equity funds	442	-	442	18	354	-	354	15
Debt instruments table c12 note *
Securities issued or guaranteed by the Government of Canada	189	-	189	8	186	-	186	8
Securities issued or guaranteed by a provincial government	68	-	68	3	40	-	40	2
Fixed-income funds	375	225	600	24	409	212	621	27
Other securities	3	-	3	-	3	-	3	-
Infrastructure funds	-	375	375	15	-	347	347	15
Real estate funds	-	408	408	16	-	433	433	18
SPA statutory deposit	1	53	54	2	-	61	61	3
Total	1,432	1,061	2,493	100	1,292	1,053	2,345	100
Table c12 note(s) Table c12 note * Debt instruments consists of fixed-income securities and inflation-linked assets. Return to table c12 note * referrer

Total cash payments

Regulations governing registered 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, 2024, reflect the Pension Plan’s performance in 2023.

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 115% (110% as at January 1, 2023). The valuation reported a solvency excess of $285 million and a three-year average solvency excess of $140 million ($177 million excess and $22 million excess, respectively, for the valuation completed at January 1, 2023). 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 136% (140% as at January 1, 2023). The valuation reported a going-concern excess of $597 million ($624 million for the valuation completed at January 1, 2023).

The funding requirements of the Pension Plan are determined by the 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 May 2023. Bank contributions to the Pension Plan will resume depending on the results of actuarial valuations in subsequent years. Contributions in 2025 will be based on the actuarial valuation as at January 1, 2025, and the Bank anticipates that, if the results of 2024 are in line with actuarial assumptions, its contributions will not resume in 2025.

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. Since January 1, 2020, the SPA’s employer contribution has been determined according to a going-concern valuation, which is 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 2025 are expected to be $7 million.

13. 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 and Intangible assets are discussed in Note 7. Those related to Lease liabilities are discussed in Note 11.

As at December 31, 2024, the total minimum payments for long-term contracts, other than those related to capital assets, were as follows:

Due within one year	40
Due between one and three years	61
Due between three and five years	18
Due thereafter	28
Total minimum payments	147

Foreign currency swap facilities

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

As at December 31, 2024	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	Chinese renminbi	January 7, 2026	200,000
Other swap facilities
Exchange Fund Account of Canada	Canadian dollars	No expiry	Unlimited
Federal Reserve Bank of New York	US dollars	December 12, 2025	2,000
Bank of Mexico	Canadian dollars	December 12, 2025	1,000
Bank for International Settlements	Canadian dollars	No expiry	100

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 Bank of Mexico expire on December 12, 2025, and 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 facility, other liquidity and other swaps were not accessed, by either party, in 2024 (not accessed in 2023). No related commitments existed as at December 31, 2024 ($nil as at December 31, 2023).

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 material.

Bank for International Settlements shares

The 9,441 shares in the BIS have a nominal value of SDR5,000 per share, of which 25% (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 $66 million as at December 31, 2024 ($63 million as at December 31, 2023), based on prevailing exchange rates.

Guarantees

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.

14. Deficiency

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

The Bank’s deficiency is composed of the following elements:

As at December 31	2024	2023
Share capital	5	5
Statutory reserve	-	-
Special reserve	100	100
Investment revaluation reserve	547	463
Actuarial gains reserve	453	324
Accumulated deficit	(9,817)	(6,738)
Total deficiency	(8,712)	(5,846)

Share capital

The authorized capital of the Bank is $5 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 is accumulated out of net income until it reaches the stipulated maximum amount of $25 million, consistent with the requirement of section 27 of the Bank of Canada Act. In 2022 the statutory reserve was reduced to $nil. If the Bank’s reserve fund is less than the paid-up capital, one-third of surplus income is to be allocated to the reserve fund, and the residual amount is to be paid to the Receiver General for Canada. When the reserve fund is not less than the paid-up capital, one-fifth of the surplus income is to be allocated to the reserve fund until that fund reaches an amount five times the paid-up capital, and the residual amount is to be paid to the Receiver General.

Special reserve

Pursuant to section 27.1 of the Bank of Canada Act, the special reserve’s purpose is 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 has been established, 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, following 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. As at December 31, 2024, the investment revaluation reserve had a balance of $547 million ($463 million as at December 31, 2023).

Actuarial gains reserve

The actuarial gains reserve accumulates the net actuarial gains and losses recognized on the Bank’s post-employment defined-benefit plans subsequent to its transition to IFRS Accounting Standards. As at December 31, 2024, the actuarial gains reserve had a balance of $453 million ($324 million as at December 31, 2023).

Accumulated deficit

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. However, the Budget Implementation Act, 2023, No. 1 temporarily requires the Bank to apply any of its ascertained surplus to the accumulated deficit until the earlier of the following events occurs: either the accumulated deficit is equal to zero, or the ascertained surplus applied to the accumulated deficit is equal to the losses that the Bank incurred from the purchase of securities as part of the Government of Canada Bond Purchase Program. Despite the losses in the last three years, the mandate of the Bank allows for sufficient cash flows to continue operations and meet its obligations. As at December 31, 2024, the Bank had an accumulated deficit balance of $9,817 million ($6,738 million as at December 31, 2023).

The Bank withholds from its remittance to the Receiver General for Canada, per the remittance agreement with the Minister of Finance, an amount equal to any increase in cumulative net unrealized losses on financial assets that are classified and measured at FVOCI, unrealized remeasurements of the net defined-benefit asset or liability 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. As at December 31, 2024, no balance in withheld remittances was outstanding to the Receiver General for Canada ($nil as at December 31, 2023).

15. 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 includes members of the Executive Council, the Governing 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 material 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 and recovers the cost of these services. Services in the amount of $1 million were fully recovered from the Pension Plan in 2024 ($1 million in 2023). Disclosures related to the Bank’s post-employment benefit plans are included in Note 12.

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 Governing Council and the Board of Directors. The number of key management personnel as at December 31, 2024, was 24 (30 in 2023).

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	2024	2023
Salary and short-term employee benefits	5	8
Post-employment benefits	1	2
Directors’ fees table c16 note *	-	-
Total compensation	6	10
Table c16 note(s) Table c16 note * Total compensation relating to directors’ fees was $334,000 in 2024 ($305,000 in 2023). Return to table c16 note * referrer

There were no other long-term employee benefit costs or termination benefits related to key management personnel in 2024 ($nil in 2023).