The Globe and Mail reports in its Friday edition that David Dodge agrees with how the Bank of Canada is handling the COVID-19 pandemic. The Globe's David Parkinson writes that Mr. Dodge says, "They've done what they needed to do. That is to ensure liquidity -- that's the prime job of the bank at this point in time.
[But] this is not without consequences down the line."
Mr. Dodge is talking about the decision last week by Governor Stephen Poloz to not only slash the bank's key interest rate, but to launch a massive government-bond-buying program that will inject money directly into financial markets and dramatically expand the central bank's balance sheet.
The program is a form of what central banks call quantitative easing.
Mr. Dodge, who headed the BOC from 2001 to 2008, is more qualified than most to weigh in on such matters.
Mr. Dodge heads up a "crisis working group" recently formed by the C.D. Howe Institute to quickly assess and recommend BOC and government responses to the COVID-19 crisis.
He says the BOC is "printing a lot of money to provide liquidity in the system." Mr. Dodge says: "Every country has issues when they print money. It will require inordinately deft management as we move out."
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