Alternative futures for Government of Canada debt management

Abstract

Purpose

This paper aims to present four blue-sky ideas for lowering the cost of the Government of Canada’s debt without increasing the debt’s risk profile.

Design/methodology/approach

The authors argue that each idea would improve the secondary-market liquidity of government debt, thereby increasing the demand for government bonds, and thus, lowering their cost at issuance.

Findings

The first two ideas would improve liquidity by enhancing the active management of the government’s debt through market operations used to support the liquidity of outstanding bonds. The second two ideas would simplify the set of securities issued by the government, concentrating issuance in a smaller set of bonds that would each be more highly traded.

Originality/value

The authors discuss the ideas and give an account of the political, legal and operational impediments.

Citation

Garriott, C., Lefebvre, S., Nolin, G., Rivadeneyra, F. and Walton, A. (2020), "Alternative futures for Government of Canada debt management", Journal of Financial Economic Policy, Vol. 12 No. 4, pp. 659-685. https://doi.org/10.1108/JFEP-07-2019-0149