Alternative Futures for Government of Canada Debt Management

Bank of Canada Staff Discussion Paper/Document d’analyse du personnel 2018-15

34 Pages Posted: 13 Feb 2019

Date Written: December 1, 2018

Abstract

This paper presents four blue-sky ideas for lowering the cost of the Government of Canada’s debt without increasing the debt’s risk profile. We argue that each idea would improve the secondary-market liquidity of government debt, thereby increasing the demand for government bonds and thus lowering their cost at issuance. The first two ideas would improve liquidity by enhancing the active management of the government’s debt through market operations used to support the liquidity of outstanding bonds. The second two ideas would simplify the set of securities issued by the government, concentrating issuance in a smaller set of bonds that would each be more highly traded. We discuss the ideas and give an account of the political, legal and operational impediments.

Keywords: Debt Management, Financial Markets, Market Structure and Pricing

JEL Classification: G, G1, G12, G2, G24, H, H6, H63

Suggested Citation

Garriott, Corey and Lefebvre, Sophie and Nolin, Guillaume and Rivadeneyra, Francisco and Walton, Adrian, Alternative Futures for Government of Canada Debt Management (December 1, 2018). Bank of Canada Staff Discussion Paper/Document d’analyse du personnel 2018-15, Available at SSRN: https://ssrn.com/abstract=3327315 or http://dx.doi.org/10.2139/ssrn.3327315

Corey Garriott

TMX Group ( email )

130 King St W
Toronto, Ontario M5X 2A2
Canada

Sophie Lefebvre

Bank of Canada ( email )

234 Wellington Street
Ottawa, Ontario K1A 0G9
Canada

Guillaume Nolin

Bank of Canada ( email )

234 Wellington
Ottawa, Ottawa K1A 0G9
Canada
6137828648 (Phone)

Francisco Rivadeneyra (Contact Author)

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

HOME PAGE: http://sites.google.com/site/rivadeneyr/research

Adrian Walton

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

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