After three years of financial losses, it appears the Bank of Canada has returned to profitability.
This marks a significant turnaround. The Bank began experiencing losses for the first time in its history during the summer of 2022. At the time, few expected the scale of losses that would ultimately unfold. In November 2022, the Bank itself projected total losses between $5 and $6 billion over several years. My University of Calgary colleague Professor Sonja Chen and I conducted a separate analysis for the C.D. Howe Institute, estimating losses ranging from $3.6 billion to $8.8 billion, with a mid-range estimate of $5.7 billion.
While the exact total remains unknown until the Bank’s financial statements are released later this year, recent data allows us to get close. The Bank’s equity position has shifted dramatically—from a peak of nearly $1 billion in the summer of 2022 to a negative value of nearly $9 billion by the end of June 2025, when it bottomed out. This implies cumulative losses of approximately $9.9 billion, which exceeds even the high-end estimate of our previous work.
Graphic credit: Janice Nelson
Importantly, the Bank of Canada was not alone in facing losses. Central banks in many countries—including the United States, Australia, the United Kingdom, the Eurozone countries, Switzerland, and more—experienced similar challenges during this period. But understanding the causes of this experience, and its implications for the Bank and the broader federal government, is important nonetheless, despite this being a common experience.
Why the Bank of Canada lost money
Unlike commercial banks, the Bank of Canada’s operations are relatively straightforward. Its income is largely derived from interest earned on government bonds. Its expenses include typical operational costs—wages, salaries, equipment, computing, and the production of banknotes. In addition, the Bank pays interest on deposits that commercial banks, the federal government, and a few other entities make at the central bank.If you’re interested in a fun paper on the topic, read this.
