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Tell me it’s bad without telling me it’s bad. (Historic loss and it’s 87 year history)
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They lent money/hold bonds at low rates.
Rates went up. That devalues those low-rate loans/bonds.
This is just accounting for that devaluation.
how do you lose money as a bank
you are money
Puts on Canada
The Bank of Canada lost $522 million in the third quarter, marking its first loss in history. The central bank attributed the loss to “unprecedented” challenges posed by the COVID-19 pandemic.
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Sam bankman laughing and spanking it in the corner
A central bank losing money isn’t the same thing as any other entity losing money. The central bank essentially has infinite money, the only limit to letting that money out is people coming to believe that the bank’s money is worthless.
That said, it looks like BoC is going to have to hike some – as the money wasn’t truly lost but rather went into the hands of those who sold assets, which is inflationary.
What is the Bank of Canada’s /R username?
This thread is full of insightful and enlightening comments from highly qualified individuals.
Out of interest, anybody know of any large bank or company posted profits or losses from any quarter or year end, where it was a tiny amount, like $10?
Can’t you people proofread your titles before you post ? Jesus you guys are stupid
#oMg ThIs Is ReLaTeD tO mY bAgS
The reason this is unique to a central bank is because rather than higher risk loan assets, their interest income comes from lower yield, safer bonds, meaning their interest income is much less than non-central bank loan portfolios. Additionally, when they raise their rates, they’re immediately beginning to pay out the increases and they’re paying it on all deposits from their member banks. Low yield bonds – high cost deposits = negative interest income.
Non-central banks have a large portion of their deposit portfolio they don’t pay interest on with checking accounts and they don’t usually raise term deposit rates to the same magnitude as the central bank, meanwhile they’re immediately raising their loan rates in tandem with the rate hikes. High yield loans – low cost deposits = positive net interest income.
The central bank can afford negative interest income so it’s actually not that bad. It’s necessary to address inflation.
Per usual, it is the gubment’s fault. This is a good read:
https://financialpost.com/fp-answers/why-bank-of-canada-losing-money
“…a side effect of ratcheting up interest rates so quickly is that the cost of holding all those bank deposits now exceeds the value of the central bank’s assets.”
This is one of the dumbest things I’ve seen.
It’s the Bank of Canada. It is our central bank. It literally prints money. It is not a retail bank. You have to have zero understanding of banks, banking, finance, or economics to think this an investment issue.
Let’s see the blame playbook saaaaaays….
Annnd it’s Anti-vax Truckers.
Nothing 1.5 million new immigrants won’t fix.
Can’t believe I beat Bank of Canada at its own game! I lost on my first year!
This is a result of the rising rate environment and expected to be temporary.
I believe many central banks are in the same situation.
Im dumb but the bank of canada isnt a company its a brnach of the gov. They do the monetary policy and a bunch of other stuff like the fed in the states basically. If they are loosing because their assets arent generating the interest offset this might mean they CANT keep raising their own rates of else eff themselves more. So my completely uneducated guess here is that they’ll have to stop raising rates because they are punching themselves in the face every-time they do.
Ha ha… wait those fuckers have all my money
In all seriousness, is anyone still holding long positions? Am I crazy to just be holding stock right now? Even if the assumption is let it sit minimum 5 years
Tell me when this says “Bank of America” & i’ll be worried. We’re already in the start of a new bull market, you bears can keep dreaming
Have they tried canceling Disney+?
Let me play you the song of my people! *wailing bagpipe solo of failed authoritarian economic policy*