The Canada Savings Bond was an investment instrument offered by the

Government of Canada The government of Canada (french: gouvernement du Canada) is the body responsible for the federal administration of Canada. A constitutional monarchy, the Crown is the corporation sole, assuming distinct roles: the executive, as the ''Crown ...

from 1945 to 2017, sold between early October and December 1 of every year. It was issued by the Bank of Canada and was intended to offer a competitive

interest rate An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, ...

, and had a guaranteed minimum interest rate.

History

4 Reasons for Buying Victory Bonds - WDL

Canada started selling

war bond War bonds (sometimes referred to as Victory bonds, particularly in propaganda) are debt securities issued by a government to finance military operations and other expenditure in times of war without raising taxes to an unpopular level. They are ...

s (marketed as "Victory Bonds") in 1917 to raise money during

World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...

for the

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. Five bond campaigns were held from 1915 to 1919. To advertise the purchasing of Victory Bonds, the Victory Loan Dominion Publicity Committee created artwork, held parades, and had

celebrity Celebrity is a condition of fame and broad public recognition of a person or group as a result of the attention given to them by mass media. An individual may attain a celebrity status from having great wealth, their participation in sports ...

endorsements. Community members who bought many Victory Bonds were given a Victory Loan Honour Flag as a token of gratitude. The program was revived for

World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposing ...

. Canada Savings Bonds were first offered in 1945 in order to replicate the success of Victory Bonds. In 2004, consultants gave the Department of Finance a report suggesting the CSB program be scrapped, giving an overall program cost savings of about $650 million in nine years. Then-finance minister

Ralph Goodale Ralph Edward Goodale (born October 5, 1949) is a Canadian diplomat and retired politician who has served as the Canadian High Commissioner to the United Kingdom since April 19, 2021. Goodale was first elected in 1974 as the member of Parliamen ...

rejected the recommendation as the program remained popular, especially with first-time investors, and opted to have the program changed to be more competitive and attract investors. The value of bonds issued declined from $55 billion (Canadian) in 1987 to just over $6 billion in 2015. A government-commissioned study by

KPMG KPMG International Limited (or simply KPMG) is a multinational professional services network, and one of the Big Four accounting organizations. Headquartered in Amstelveen, Netherlands, although incorporated in London, England, KPMG is a net ...

in June 2015 recommended cancelling the program. Despite this recommendation, the Department of Finance ruled out cancellation despite the program's estimated $58 million annual cost. As of October 2016, the Liberal government considered ending the program. On March 22, 2017, the federal budget announced its decision to end the sale of new CSBs, saying they would be discontinued in 2017. No further bond purchases will be allowed, however existing bonds will still be honoured until they are redeemed.

Types of bonds

Canada Savings Bonds were available in regular interest, which paid the interest directly to the bond holder, and compounding interest, which added to interest to the principal for the purpose of future interest calculations, only paying when the bond was redeemed. The interest rate was guaranteed for 1 year and could fluctuate with market conditions for the remaining 9 years until its maturity. These bonds were redeemable at any time. Canada Premium Bonds were also a available in regular and compounding interest. These bonds, introduced in 1997, differ from the regular savings bonds in that they were sold with a higher interest rate fixed through the third year; the interest rate would fluctuate for the remaining 7 years with market conditions until its maturity. This greater interest rate stability was considered a premium feature. Conversely, they were only redeemable on the anniversary of the issue date or during the 30 days thereafter. Canada Investment Bonds were non-redeemable until maturity, but were shorter-term bonds with a three-year maturity. They were available only through investment brokers. They were offered from October 1, 2003, and April 1, 2004; only 6 series were issued before their discontinuation.

References

External links

Official website

CBC News In Depth: Canada Savings Bonds

Rest in peace, CSB: A eulogy for the Canada Savings Bond
{{Economy of Canada footer Saving Bonds Government bonds issued by Canada Finance in Canada

History

Types of bonds

See also

References

External links