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The Canada Savings Bond was an
investment Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is ...
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-in ...
from 1945 to 2017, sold between early October and December 1 of every year. It was issued by the
Bank of Canada The Bank of Canada (BoC; french: Banque du Canada) is a Crown corporation and Canada's central bank. Chartered in 1934 under the '' Bank of Canada Act'', it is responsible for formulating Canada's monetary policy,OECD. OECD Economic Surveys: C ...
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, th ...
, and had a guaranteed minimum interest rate.


History

Canada started selling
war bond War bonds (sometimes referred to as Victory bonds, particularly in propaganda) are Security (finance)#Debt, debt securities issued by a government to finance military operations and other expenditure in times of war without raising taxes to an un ...
s (marketed as "Victory Bonds") in 1917 to raise money during World War I for the
Allies of World War I The Allies of World War I, Entente Powers, or Allied Powers were a coalition of countries led by France, the United Kingdom, Russia, Italy, Japan, and the United States against the Central Powers of Germany, Austria-Hungary, the Ottom ...
. 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
parade A parade is a procession of people, usually organized along a street, often in costume, and often accompanied by marching bands, floats, or sometimes large balloons. Parades are held for a wide range of reasons, but are usually celebrations of ...
s, 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. 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 Parliame ...
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 corporation, multinational professional services network, and one of the Big Four accounting firms, Big Four accounting organizations. Headquartered in Amstelveen, Netherlands, alth ...
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.


See also

* Épargne Placements Québec * Ontario Savings Bond * Saskatchewan Savings Bond


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