Canada Savings Bonds (CSBs) were a financial product issued by the Bank of Canada (BOC) from 1946 through 2017. They offered a competitive rate of interest, with a guaranteed minimum rate. These bonds had both regular and compound interest features and were redeemable at any time.
Introduced as a way to manage national debt, Canada Savings Bonds also provided citizens with a stable, low-risk investment option. These were similar in many ways to U.S. savings bonds offered to American citizens.
Understanding Canada Savings Bonds
The Canadian government discontinued the sale of Canada Savings Bonds in November 2017, citing declining sales and rising program administrative costs. Government officials said the bond program had gradually become a less critical part of the country’s federal debt management strategy, being replaced by funding programs that offered more financially attractive rates.1
CSBs were available in denominations of $100, $300, $500, $1,000, $5,000, and $10,000 with ten-year terms. The interest rate was fixed for the first year and would then switch to a variable rate based on market conditions for the remaining nine years until maturity.
The Canadian government will continue to honor all existing bonds at the time of maturity or redemption, and unmatured bonds will continue to earn interest until they reach the point of maturity. The Canadian treasury can reissue unmatured bonds after they have been lost, stolen or damaged, but will merely redeem any such bonds that have already reached maturity for payment instead of reissuing them.
History of Canada Savings Bonds
The genesis of the Canada Savings Bonds program is similar to that of some war bonds programs in the United States. Canada initially started selling war bonds in 1915 to help finance military efforts by the Allies during World War I. Initially dubbed war bonds, and they would become known as Victory Bonds a few years later. Around the same time, the U.S. began selling Liberty Bonds.
In 1945, the Canadian government began selling securities that were similar to the Victory Bonds but were called Canada Savings Bonds.
Over the past few decades, many Canadians first experienced investments in the form of Canada Savings Bonds. Their predictability and low risk made them a good starting point for inexperienced or cautious investors. As they grew in popularity, the bonds represented a portion of the investment portfolio for many Canadian residents.
However, the Canadian government began to see them as less attractive and not as financially profitable as other funding and debt management options. Starting in the early 2000s, federal officials and advisors in the Canadian government began recommending the program be discontinued. Initially, finance department officials resisted and instead implemented some tweaks to the program, making it more competitive and appealing to investors.
A few years later, though, government studies revealed the escalating costs of the program did not make it fiscally practical. The value of bonds issued was dropping significantly. In March 2017, as part of the release of the federal budget, the government announced the end of the Canada Savings Bonds program, effective later that year.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
