Canada Gazette, Part I, Volume 153, Number 15: GOVERNMENT NOTICES

April 13, 2019

BANK OF CANADA

FINANCIAL STATEMENTS
DECEMBER 31, 2018

Glossary of abbreviations

AFS	available-for-sale
BIS	Bank for International Settlements
CPA Canada	Chartered Professional Accountants of Canada
FVOCI	fair value through other comprehensive income
FVTPL	fair value through profit or loss
HTM	held-to-maturity
IAS	International Accounting Standard
IASB	International Accounting Standards Board
IFRS	International Financial Reporting Standards
IMF	International Monetary Fund
ITA	Income Tax Act
LVTS	Large Value Transfer System
OCI	other comprehensive income
PSAS	Public Sector Accounting Standards
Pension Plan	Bank of Canada Pension Plan
SDR	Special Drawing Rights
SIPP	Statement of Investment Policy and Procedures
SPA	Bank of Canada Supplementary Pension Arrangement
SPRAs	securities purchased under resale agreements
SSRAs	securities sold under repurchase agreements

Financial Reporting Responsibility

Management of the Bank of Canada (the Bank) is responsible for the financial statements, which are prepared in accordance with International Financial Reporting Standards. The amounts and financial information included in the statements reflect management’s best estimates and judgment. Financial information presented elsewhere in the Annual Report is consistent with the financial statements.

Management is responsible for the integrity and reliability of the financial statements and the accounting system from which they are derived. The Bank maintains a system of internal controls to provide reasonable assurance that transactions are properly authorized and recognized, that financial information is reliable, that assets are safeguarded and liabilities recognized, and that operations are carried out effectively. The Bank’s internal audit department reviews internal controls, including the application of accounting and financial controls.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal controls and exercises this responsibility through the Audit and Finance Committee (the Committee) of the Board. The Committee is composed of members who are neither officers nor employees of the Bank and who are financially literate. The Committee is therefore qualified to review the Bank’s annual financial statements and to recommend their approval by the Board of Directors. The Committee meets with management, the Chief Internal Auditor and the Bank’s independent auditors who are appointed by Governor-in-Council. The Committee has established processes to evaluate the independence of the Bank’s independent auditors and oversees all services provided by them. The Committee has a duty to review the adoption of, and changes in, accounting principles, policies and procedures that have a material effect on the financial statements, and to review and assess key management judgments and estimates material to the reported financial information.

These financial statements have been audited by the Bank’s independent auditors, PricewaterhouseCoopers LLP and Ernst & Young LLP, and their report is presented herein. The independent auditors have full and unrestricted access to the Committee to discuss their audit and related findings.

Ottawa, Canada, February 13, 2019

Stephen S. Poloz
Governor

Carmen Vierula, CPA, CA
Chief Financial Officer and Chief Accountant

Independent Auditors’ Report

To the Minister of Finance, registered shareholder of the Bank of Canada

Our opinion

We have audited the financial statements of the Bank of Canada (the Bank), which comprise the statement of financial position as at December 31, 2018, and the statement of net income and comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Bank as at December 31, 2018 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other information

Management is responsible for the other information. The other information comprises the information, other than the financial statements and our auditors’ report thereon, included in the 2018 Annual Report.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information, identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Bank’s financial reporting process.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Bank to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Ottawa, Canada, February 13, 2019

PricewaterhouseCoopers LLP
Chartered Professional Accountants
Licensed Public Accountants

Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants

BANK OF CANADA

Statement of financial position as at December 31
(in millions of Canadian dollars)

	Note	2018	2017
ASSETS
Cash and foreign deposits	3, 4, 7	17.0	14.6
Loans and receivables	3, 5, 7
Securities purchased under resale agreements		10,673.0	9,478.5
Other receivables		3.1	4.5
		10,676.1	9,483.0
Investments	3, 6, 7
Government of Canada treasury bills		24,217.8	18,370.4
Canada Mortgage Bonds		251.3	-
Government of Canada bonds		79,625.4	82,087.0
Other investments		433.3	403.6
		104,527.8	100,861.0
Property and equipment	8	600.3	569.0
Intangible assets	9	44.0	40.1
Other assets	10	189.7	132.6
Total assets		116,054.9	111,100.3
LIABILITIES AND EQUITY
Bank notes in circulation	7, 11	90,193.1	85,855.9
Deposits	3, 7, 12
Government of Canada		21,725.6	21,454.2
Members of Payments Canada		250.5	500.3
Other deposits		2,830.1	2,274.3
		24,806.2	24,228.8
Other liabilities	3, 7, 13	530.3	520.0
Total liabilities		115,529.6	110,604.7
Commitments, contingencies and guarantees	15, 16
Equity	17	525.3	495.6
Total liabilities and equity		116,054.9	111,100.3

Stephen S. Poloz
Governor

Carmen Vierula, CPA, CA
Chief Financial Officer and Chief Accountant

Claire M. C. Kennedy
Lead Director, Board of Directors, and Chair, Audit and Finance Committee

(See accompanying notes to the financial statements.)

BANK OF CANADA

Statement of net income and comprehensive income for the year ended December 31 (in millions of Canadian dollars)

	Note	2018	2017
INCOME Interest revenue
Investments		1,886.9	1,603.4
Securities purchased under resale agreements		122.6	52.4
Other		0.6	0.3
		2,010.1	1,656.1
Interest expense
Deposits		(363.9)	(187.4)
Other		(0.5)	(0.4)
Net interest revenue		1,645.7	1,468.3
Dividend revenue		4.2	5.1
Other revenue		8.5	6.1
Total income		1,658.4	1,479.5
EXPENSES
Staff costs		276.1	253.6
Bank note research, production and processing		53.4	53.1
Premises costs		29.6	21.5
Technology and telecommunications		53.9	47.6
Depreciation and amortization		47.1	51.9
Other operating expenses		73.5	76.1
Total expenses		533.6	503.8
Net income		1,124.8	975.7
OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified to net income
Remeasurements of the net defined-benefit liability/asset	14	91.4	(37.1)
Change in fair value of BIS shares	2, 3	29.7	n.a.
Items that may subsequently be reclassified to net income
Change in fair value of available-for-sale financial assets	2	n.a.	(0.9)
Other comprehensive income (loss)		121.1	(38.0)
COMPREHENSIVE INCOME		1,245.9	937.7

(See accompanying notes to the financial statements.)

BANK OF CANADA

Statement of net income and comprehensive income for the year ended December 31
(in millions of Canadian dollars)

	Note	Share capital	Statutory reserve	Special reserve	Investment revaluation reserve	Retained earnings	Total
Balance as at January 1, 2018 (as restated)	2	5.0	25.0	100.0	365.6	-	495.6
Comprehensive income for the year
Net income		-	-	-	-	1,124.8	1,124.8
Remeasurements of the net defined-benefit liability/asset	14	-	-	-	-	91.4	91.4
Change in fair value of BIS shares	3	-	-	-	29.7	-	29.7
		-	-	-	29.7	1,216.2	1,245.9
Surplus for the Receiver General for Canada	13, 17	-	-	-	-	(1,216.2)	(1,216.2)
Balance as at December 31, 2018		5.0	25.0	100.0	395.3	-	525.3

	Note	Share capital	Statutory reserve	Special reserve	Investment revaluation reserve	Retained earnings	Total
Balance as at January 1, 2017		5.0	25.0	100.0	357.0	-	487.0
Comprehensive income for the year
Net income		-	-	-	-	975.7	975.7
Remeasurements of the net defined-benefit liability/asset	14	-	-	-	-	(37.1)	(37.1)
Change in fair value of BIS shares	3	-	-	-	8.6	-	8.6
Change in fair value of Government of Canada treasury bills		-	-	-	-	(9.5)	(9.5)
		-	-	-	8.6	929.1	937.7
Surplus for the Receiver General for Canada	13, 17	-	-	-	-	(929.1)	(929.1)
Balance as at December 31, 2017		5.0	25.0	100.0	365.6	-	495.6

(See accompanying notes to the financial statements.)

BANK OF CANADA

Statement of cash flows for the year ended December 31
(in millions of Canadian dollars)

	2018	2017
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received	1,905.1	1,695.7
Dividends received	4.2	5.1
Other revenue received	7.3	8.7
Interest paid	(365.4)	(187.8)
Payments to or on behalf of employees and to suppliers and to members of Payments Canada	(460.8)	(481.1)
Net increase in deposits	577.4	1,397.3
Acquisition of securities purchased under resale agreements—overnight repo	(24,333.2)	(14,590.2)
Proceeds from maturity of securities purchased under resale agreements—overnight repo	24,333.2	14,590.2
Proceeds from securities sold under repurchase agreements	11,150.2	7,800.1
Repayments of securities sold under repurchase agreements	(11,150.2)	(9,300.1)
Net cash provided by operating activities	1,667.8	937.9
CASH FLOWS FROM INVESTING ACTIVITIES
Net purchases of Government of Canada treasury bills	(5,753.3)	(1,562.6)
Purchases of Canada Mortgage Bonds	(251.1)	-
Purchases of Government of Canada bonds	(13,209.0)	(19,084.9)
Proceeds from maturity of Government of Canada bonds	15,685.0	16,775.0
Acquisition of securities purchased under resale agreements—term repo	(87,350.6)	(72,579.8)
Proceeds from maturity of securities purchased under resale agreements—term repo	86,161.9	71,381.7
Additions of property and equipment	(68.6)	(43.0)
Additions of intangible assets	(13.7)	(11.1)
Net cash used in investing activities	(4,799.4)	(5,124.7)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in bank notes in circulation	4,337.2	5,377.3
Remittance of surplus to the Receiver General for Canada	(1,204.2)	(1,193.7)
Net cash provided by financing activities	3,133.0	4,183.6
Effect of exchange rate changes on foreign currency	1.0	(1.5)
Increase (decrease) in cash and foreign deposits	2.4	(4.7)
Cash and foreign deposits, beginning of year	14.6	19.3
Cash and foreign deposits, end of year	17.0	14.6

(See accompanying notes to the financial statements.)

Notes to the financial statements of the Bank of Canada

For the year ended December 31, 2018

1. The business of the Bank of Canada

The Bank of Canada (the Bank) is the nation’s central bank. The Bank is a corporation established under the Bank of Canada Act, is wholly owned by the Government of Canada and is exempt from income taxes. The Bank does not offer banking services to the public.

The address of the Bank’s registered head office is 234 Wellington Street, Ottawa, Ontario.

The Bank conforms to the financial reporting requirements of the Bank of Canada Act as prescribed in the Bank’s bylaws, which require that the Bank’s financial statements be prepared in accordance with Generally Accepted Accounting Principles as set out in the CPA Canada Handbook published by the Chartered Professional Accountants of Canada (CPA Canada). Consistent with CPA Canada guidance, the Bank is a government business enterprise as defined by the Canadian Public Sector Accounting Standards (PSAS) and, as such, adheres to the standards applicable to publicly accountable enterprises. In compliance with this requirement, the Bank has developed accounting policies in accordance with International Financial Reporting Standards (IFRS).

The Bank’s mandate under the Bank of Canada Act is to promote the economic and financial welfare of Canada. The Bank’s activities and operations are undertaken in support of this mandate and not with the objective of generating revenue or profits. The Bank’s four core areas of responsibility are the following:

• Monetary Policy: The Bank conducts monetary policy to preserve the value of money by keeping inflation low, stable and predictable.
• Financial System: The Bank promotes safe, sound and efficient financial systems, within Canada and internationally, and conducts transactions in financial markets in support of these objectives.
• Funds Management: The Bank provides funds-management services for the Government of Canada, the Bank itself and other clients. The Bank is the fiscal agent for the government, providing treasury management services and administering and advising on the public debt and foreign exchange reserves.
• Currency: The Bank designs, issues and distributes Canada’s bank notes, oversees the note distribution system and ensures a supply of quality bank notes that are readily accepted and secure against counterfeiting.

The corporate administration function supports the management of the Bank’s human resources, operations and strategic initiatives, as well as the stewardship of financial, physical, information and technology assets.

The Bank has the exclusive right to issue Canadian bank notes, and the face value of these bank notes is the most significant liability on the Bank’s balance sheet. The Bank invests the proceeds from the issuance of bank notes into Government of Canada securities and Canada Mortgage Bonds, which are acquired on a non-competitive basis. These assets enable the Bank to execute its responsibilities for the monetary policy and financial system functions.

The interest income generated from the assets backing the bank notes in circulation (net of bank note production and distribution costs) is referred to as “seigniorage” and is the Bank’s primary source of revenue. It provides a stable and constant source of funding for the Bank’s operations, which enables the Bank to function independently of government appropriations. A portion of this revenue is used to fund the Bank’s operations and reserves, and the remaining net income is remitted to the Receiver General for Canada in accordance with the requirements of the Bank of Canada Act.

2. Basis of preparation

Compliance with International Financial Reporting Standards

These financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB).

The Board of Directors approved the financial statements on February 13, 2019.

Fiscal-agent and custodial activities

Responsibility for the operational management of the Government of Canada’s financial assets and liabilities is borne jointly by the Bank (as fiscal agent for the Government of Canada) and the Department of Finance Canada. In this fiscal-agent role, the Bank provides transactional and administrative support to the Government of Canada in certain areas, consistent with the requirements of section 24 of the Bank of Canada Act. The Bank does not bear the risks and rewards as part of its role as fiscal agent. The assets, liabilities, expenditures and revenues relating to this support are the Government of Canada’s and are not included in the financial statements of the Bank.

Securities safekeeping and other custodial services are provided to foreign central banks, international organizations and other government-related entities. Under the terms governing these services, the Bank is indemnified against losses. Any assets and income that are managed under these services are excluded from the Bank’s financial statements, as they are not assets or income of the Bank.

Measurement base

The financial statements have been prepared on a historical cost basis, except for the following items:

• financial instruments classified and measured at amortized cost, using the effective interest method;
• the Bank’s shares in the Bank for International Settlements (BIS), which are measured at fair value through other comprehensive income (FVOCI); and
• the net defined-benefit liability/asset of employee benefit plans, which is recognized as the net of the fair value of plan assets and the present value of the defined-benefit obligations.

Functional and presentation currency

The Bank’s functional and presentation currency is the Canadian dollar. The amounts in the notes to the financial statements of the Bank are in millions of Canadian dollars, unless otherwise stated.

Significant accounting policies

This section contains the Bank’s accounting policies that relate to the financial statements as a whole.

When an accounting policy is applicable to a specific note to the financial statements, the policy and related disclosures are provided within that note as identified in the table below.

Note	Topic
3	Financial instruments table 7 note *
8	Property and equipment
9	Intangible assets
10	Other assets
11	Bank notes in circulation
13	Other liabilities
14	Employee benefits
15	Leases
16	Commitments, contingencies and guarantees
18	Related parties
Table 7 note(s) Table 7 note * The accounting policies for financial instruments as discussed in Note 3 are consistent with those disclosed in the notes to the 2017 year-end financial statements for both current and comparative figures, except for those changes identified in the “Transition to IFRS 9” section below. Return to table 7 note * referrer

Revenue recognition

• Interest revenue is recognized in net income using the effective interest method.
• Dividend revenue from the Bank’s investment in BIS shares is recognized as dividends are declared.
• Other revenue is recognized in net income as it is earned, when it can be reliably measured and when collectability is probable. In the current year, Other interest expense, which was previously included within Other revenue, was reclassified as a separate line item within the statement of net income and comprehensive income to better reflect the nature of the interest stream. Comparative information was updated accordingly.

Foreign currencies

Investment income and expenses denominated in foreign currencies are translated into Canadian dollars at the exchange rate in effect at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rate prevailing at the end of the reporting period. The resulting foreign exchange gains and losses are included in Other revenue. Gains or losses on equity investments classified as FVOCI, including those related to the exchange rate, are recognized in other comprehensive income.

Impairment of non-financial assets

Non-financial assets, including Property and equipment and Intangible assets, are reviewed annually for indicators of impairment, and whenever events or changes in circumstances indicate that the carrying amount exceeds their recoverable amount.

Intangible assets under development are assessed for impairment on an annual basis.

Key accounting judgments, estimates and assumptions

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and other related information.

The Bank based its assumptions and estimates on the information available when these financial statements were prepared. Existing circumstances and assumptions about future developments may change, however, in response to market fluctuations or circumstances that are beyond the control of the Bank. In such cases, the impact will be recognized in the financial statements of a future reporting period.

Judgments, estimates and underlying assumptions are reviewed for appropriateness and consistent application on an ongoing basis. Revisions to accounting estimates are recognized in the reporting period in which the estimates are revised and in any future reporting periods affected.

Significant judgment and estimates are used in the measurement of financial instruments (Note 3) and employee benefits (Note 14).

Current changes to IFRS

Effective January 1, 2018, the Bank adopted IFRS 15 Revenue from contracts with customers (IFRS 15) and IFRS 9 Financial instruments (IFRS 9) as described below. No other new or amended standards were adopted by the Bank during 2018 that had a significant impact on its financial statements.

IFRS 15 Revenue from contracts with customers

IFRS 15 relates to the recognition of revenue that applies to all contracts with customers, except for contracts that are within the scope of the standards on leases, insurance contracts and financial instruments.

The adoption of IFRS 15 did not have a significant impact on the Bank, as substantially all the Bank’s revenues are generated by financial instruments within the scope of IFRS 9.

IFRS 9 Financial instruments

Effective January 1, 2018, the Bank has applied IFRS 9 and the related amendments to other IFRSs in accordance with the transition provisions set out in IFRS 9.

IFRS 9 eliminated the existing financial asset categories and adopted a principles-based approach to the classification of financial assets, which is driven by a financial instrument’s cash-flow characteristics and the business model in which it is held.

IFRS 9 also introduced an expected loss impairment model for all financial assets not measured at fair value through profit or loss (FVTPL). The model has three stages:

• (1) on initial recognition, 12-month expected credit losses (ECLs) are recognized in profit or loss, and interest revenue is calculated on the gross carrying amount of the asset;
• (2) if credit risk increases significantly from initial recognition, lifetime ECLs are recognized in profit or loss, and interest revenue is calculated on the gross carrying amount of the asset; and
• (3) when a financial asset is considered credit-impaired, interest revenue is calculated based on the net carrying amount of the asset (gross carrying amount less the loss allowance), rather than on its gross carrying amount.

Finally, IFRS 9 included a new hedge accounting model, together with corresponding disclosures about risk management activities for those applying hedge accounting. The new model represented a substantial overhaul of hedge accounting that enables entities to better reflect their risk management activities in their financial statements. The most significant changes applied to those entities that hedge non-financial risk.

With regard to the Bank’s financial statements, the adoption of IFRS 9 resulted in changes to the Bank’s accounting policies for the classification and measurement of financial instruments, and the impairment of financial assets. IFRS 9 also significantly amended other standards relating to financial instruments, such as IFRS 7 Financial instruments: disclosures (IFRS 7). The changes to hedge accounting were not applicable to the Bank, as the Bank does not engage in hedging activities.

The Bank’s revised accounting policies for financial instruments are discussed in Note 3.

As permitted by the transitional provisions of IFRS 9, the Bank elected not to restate comparative figures since the impact of the adoption is not significant to the Bank’s financial statements. As such, the accounting policies for prior-period financial statements are consistent with those disclosed in the Bank’s financial statements for the year ended December 31, 2017, as described in the “Transition to IFRS 9” section below. Any adjustments to the carrying amounts of financial instruments at the date of transition were recognized in the opening retained earnings and other reserves of the current period. For note disclosures, the amendments to IFRS 7 have also been applied to the current period only and were primarily qualitative in nature.

The impact of the transition to IFRS 9 is discussed in the following section.

Transition to IFRS 9

IFRS 9 introduces new requirements for financial instrument classification and measurement, impairment of financial assets, and general hedge accounting. As such, the Bank assessed its existing financial assets and liabilities against the requirements of IFRS 9 as of the date of initial application, January 1, 2018.

Summary of impact on the financial statements

Area	Impact
Classification and measurement	Financial instruments were assessed under the classification and measurement requirements of IFRS 9. Reclassification of financial instruments into the IFRS 9 categories had no overall impact on their respective classification or measurement basis, except for cash and foreign deposits and Government of Canada treasury bills. Cash and foreign deposits were previously classified as FVTPL and are now recorded at amortized cost. Government of Canada treasury bills were previously classified as available-for-sale and measured at FVOCI and are now recorded at amortized cost.
Impairment	Financial assets were assessed for impairment under the IFRS 9 ECL model, which had no significant impact on the Bank’s financial statements.
General hedge accounting	This is not applicable to the Bank’s operations since the Bank does not engage in hedging activities.

Pre-transition accounting policy for the Bank’s financial instruments

As the Bank elected not to restate its comparative figures for the transition to IFRS 9, the accounting policies for comparative figures are consistent with those disclosed in the Bank’s financial statements for the year ended December 31, 2017, as described within this section.

Classification and measurement

The prior-period classification and measurement bases for each category of the Bank’s financial instruments are presented in the section “Assessment of financial instruments held at transition” below, which also includes the current period classification and measurement bases and the rationale for any changes resulting from the transition to IFRS 9 on January 1, 2018.

Impairment

The Bank assessed whether there was objective evidence that a financial asset or group of assets was impaired at the end of the reporting period. Once impaired, financial assets carried at amortized cost were remeasured at the net recoverable amount, with the amount of impairment recognized in net income. Unrealized losses on impaired AFS financial assets were recognized in net income at the time of impairment. The Bank had no impairment allowances recorded in accordance with IAS 39 Financial instruments: recognition and measurement (IAS 39)’s incurred loss model as at December 31, 2017.

Changes to the accounting of the Bank’s financial instruments

Assessment of financial instruments held at transition

Management assessed the financial instruments held by the Bank in accordance with IFRS 9 as at the date of initial application. Management then classified the instruments into the appropriate categories based on the Bank’s business model for the instruments and the nature of each instrument’s cash flows. The following table reconciles the carrying amounts of financial instruments from their previous measurement categories in accordance with IAS 39 to their new measurement categories on transition to IFRS 9, effective January 1, 2018.

	Measurement category			Carrying amount
	Ref.	Original (IAS 39)	New (IFRS 9)	Original (IAS 39)	New (IFRS 9)	Difference due to change in measurement category
FINANCIAL ASSETS
Cash and foreign deposits	A	FVTPL	Amortized cost	14.6	14.6	-
Securities purchased under resale agreements	B	Loans and receivables: Amortized cost	Amortized cost	9,478.5	9,478.5	-
Other receivables	B	Loans and receivables: Amortized cost	Amortized cost	4.5	4.5	-
Government of Canada treasury bills	C	Available-for-sale: FVOCI	Amortized cost	18,370.4	18,380.1	9.7
Government of Canada bonds	B	Held-to-maturity: Amortized cost	Amortized cost	82,087.0	82,087.0	-
BIS shares (sole component of Other investments)	D	Available-for-sale: FVOCI	Designated FVOCI	403.6	403.6	-
FINANCIAL LIABILITIES
Bank notes in circulation	E	Face value	Face value	85,855.9	85,855.9	-
Deposits	E	Amortized cost	Amortized cost	24,228.8	24,228.8	-
Other liabilities	E	Amortized cost	Amortized cost	520.0	520.0	-
Total difference due to change in measurement category						9.7

The application of the new classification and measurement requirements of IFRS 9 led to the following impacts on financial instruments held by the Bank on January 1, 2018.

(A) Change in classification from FVTPL to amortized cost

Cash and foreign deposits have been reclassified to amortized cost. The Bank’s business model is to hold cash and foreign deposits for cash flow purposes, and the cash flows represent solely payments of principal and interest. There is no impact on the Bank’s financial position, net income or other comprehensive income as a result of this change.

(B) Change in classification of retired categories with no change in measurement

The following debt instruments have been reclassified to new categories with no changes to their measurement basis under IFRS 9, since their previous categories under IAS 39 were retired:

• Debt instruments previously classified as loans and receivables per IAS 39 categorization are now classified and measured at amortized cost.
• Debt instruments previously classified as held-to-maturity per IAS 39 categorization are now classified and measured at amortized cost.

(C) Change in classification from available-for-sale to amortized cost

Government of Canada treasury bills were reclassified from available-for-sale and measured at FVOCI to classified and measured at amortized cost. The Bank’s intention is to hold these investments for the collection of contractual cash flows, and the cash flows represent solely payments of principal and interest.

The impact of the transition to the carrying value of the Government of Canada treasury bills is an increase of $9.7 million as at January 1, 2018, and a corresponding increase of $9.7 million in retained earnings. This amount was reclassified from Retained earnings to Surplus payable to the Receiver General for Canada on January 1, 2018, per the Bank’s remittance agreement with the Minister of Finance in accordance with section 27 of the Bank of Canada Act. As a result, the balance of the Surplus payable to the Receiver General for Canada of $204.2 million as at December 31, 2017, was increased to $213.9 million as at January 1, 2018.

(D) Designation of equity instruments as FVOCI

The Bank’s investment in BIS shares, which is the sole component of Other investments, was previously classified as available-for-sale equity instruments and is now classified as equity instruments irrevocably designated as FVOCI, since the Bank’s business model is to hold these shares to enable its participation as a member of the BIS. The changes in fair value of such instruments will no longer be reclassified to net income if disposed of, and the instruments will no longer be assessed for impairment.

There was no difference between their previous carrying amount and their revised carrying amount, and there is no impact on the Bank’s financial position, net income or other comprehensive income. The change in fair value of these assets will be reclassified within the statement of net income and comprehensive income from Items that may subsequently be reclassified to net income to Items that will not be reclassified to net income. The change in fair value on these assets continues to be accumulated as part of Equity, in the Investments revaluation reserve, formerly the Available-for-sale reserve under IAS 39.

(E) No change in classification or measurement

There were no changes to classification or measurement for any of the Bank’s financial liabilities held on transition, and there was no impact on the Bank’s financial position, net income or other comprehensive income.

Reconciliation of impairment allowance balances at transition

On the date of initial application of January 1, 2018, the Bank’s existing financial assets were assessed for impairment in accordance the requirements of IFRS 9, as discussed in Note 3.

The Bank had no impairment allowances recorded in accordance with IAS 39’s incurred loss model as at December 31, 2017, and had no impairment allowances recorded in accordance with IFRS 9’s expected loss model as at January 1, 2018, since it was determined that the allowance would be negligible given the nature of the Bank’s financial assets.

Impact on the financial statements

The summary financial statements presented below show the changes resulting from the transition to IFRS 9.

Impact on opening financial statements as at date of initial application—January 1, 2018

The total impact of these changes on the Bank’s opening financial statements as at January 1, 2018, following the December 31, 2017, year-end is as follows:

Partial statement of financial position

	Ref.	December 31, 2017	Effect of transition to IFRS 9	January 1, 2018
Assets Investments
Government of Canada treasury bills		18,370.4	9.7	18,380.1
Total assets		18,370.4	9.7	18,380.1
Liabilities and equity
Other liabilities	A	520.0	9.7	529.7
Total liabilities		520.0	9.7	529.7
Equity	B	495.6	-	495.6
Total liabilities and equity		1,015.6	9.7	1,025.3

(A) Other liabilities includes the Surplus payable to the Receiver General for Canada as described in Note 13, which contains the cumulative withholdings of unrealized losses in accordance with the Bank’s remittance agreement with the Minister of Finance (Note 17).

Cumulative withholdings of unrealized losses as at December 31, 2017	156.0
Withholdings of unrealized losses on treasury bills as at December 31, 2017 [see (B) below]	(9.7)
Cumulative withholdings as at January 1, 2018	146.3

With the elimination of withholdings on transition related to Government of Canada treasury bills, the amount becomes remittable to the Receiver General for Canada and is therefore included in Other liabilities as Surplus payable to the Receiver General for Canada.

(B) The $9.7 million impact of the reclassification of Government of Canada treasury bills results in an equivalent increase in retained earnings. However, the impact on retained earnings flows immediately to the surplus payable for the Receiver General for Canada in accordance with the Bank’s remittance agreement with the Minister of Finance, as stipulated by section 27 of the Bank of Canada Act. As a result, the balance of the Surplus payable to the Receiver General for Canada of $204.2 million as at December 31, 2017, was increased to $213.9 million as at January 1, 2018.

Future changes to IFRS

The following new standard issued by the IASB was assessed as having a possible effect on the Bank in the future.

IFRS 16 Leases (IFRS 16)

In January 2016, the IASB issued IFRS 16, which provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. It supersedes IAS 17 Leases (IAS 17) and its associated interpretive guidance. Significant changes have been made to lessee accounting since the distinction between operating and finance leases was eliminated; thus, assets and liabilities must be recognized for all leases (subject to limited exceptions for short-term leases and leases of low-value assets). IFRS 16 does not include significant changes to the requirements for lessors.

The mandatory effective date for the adoption of IFRS 16 is January 1, 2019, as determined by the IASB, although earlier application was permitted for companies that also early-adopted IFRS 15. The Bank has determined that the transition to IFRS 16 will result in the recognition of additional lease assets of $54.2 million and related liabilities on the Bank’s statement of financial position, with no impact on opening equity. The Bank has also determined that the changes to lease accounting are not expected to have a significant impact on the Bank’s financial statements. As such, the Bank has opted not to restate its comparative information upon adoption of IFRS 16. Additional disclosures related to the Bank’s lease accounting policies will be required.

3. Financial instruments

The Bank’s financial instruments consist of the following:

• cash and foreign deposits,
• loans and receivables,
• investments,
• bank notes in circulation,
• deposits,
• securities sold under repurchase agreements (SSRAs), and
• other liabilities.

Bank notes in circulation, the net defined-benefit liability/asset for pension benefit plans and other employee benefit plans, and lease contracts are excluded from this note. There were no changes to accounting policies following the adoption of IFRS 9 for bank notes in circulation and lease contracts, and, as a result, these policies are consistent with those disclosed in the notes to the 2017 year-end financial statements. The required disclosures for the net defined-benefit liability/asset for pension benefit plans and other employee benefit plans are discussed in Note 14.

The accounting policies for financial instruments as discussed below are consistent with those disclosed in the notes to the 2017 year-end financial statements, except those changes identified in the “Transition to IFRS 9” section of Note 2.

Accounting policy

Recognition

The Bank accounts for all financial instruments using settlement-date accounting. Financial assets and liabilities are recorded when the Bank becomes party to the contractual provisions of the instruments.

Initial recognition

Financial instruments are initially recognized at fair value plus transaction costs, if any, except for financial assets classified as FVTPL, in which case transaction costs are recognized immediately in net income. See the “Supporting information” section for details on how the Bank determines the fair value of its financial instruments. Subsequent to initial recognition, an ECL assessment is performed for financial assets measured at amortized cost, and any ECLs are recognized in net income.

Derecognition

The Bank derecognizes a financial asset when it considers that substantially all the risks and rewards of the asset have been transferred or when the contractual rights to the cash flows of the financial asset expire. The Bank does not derecognize collateral pledged by the Bank under standard repurchase agreements and securities-lending transactions, since the Bank retains substantially all risks and rewards on the basis of the predetermined repurchase price. The Bank derecognizes financial liabilities when the Bank’s obligations are discharged, are cancelled or expire.

Classification

Financial instruments are classified into one of the following categories based on their nature and business purpose:

• Financial assets
  • cash and cash equivalents at amortized cost
  • debt instruments at amortized cost
  • equity instruments at FVOCI
• Financial liabilities
  • financial liabilities at amortized cost

Financial instrument categories	Bank’s business model	Cash flow characteristics
Financial assets
Cash and cash equivalents at amortized cost Cash and foreign deposits	Collect contractual cash flows; hold for cash flow management purposes	Solely payments of principal and interest
Debt instruments at amortized cost SPRAs Advances to members of Payments Canada Other receivables Government of Canada treasury bills Canada Mortgage Bonds Government of Canada bonds	Collect contractual cash flows	Solely payments of principal and interest
Equity instruments at FVOCI BIS shares	Do not hold for trading;table 2 note * hold as part of the Bank’s functions as a central bank	Dividend payments
Financial liabilities
Financial liabilities at amortized cost Deposits SSRAs Other liabilities	Pay contractual cash flows	N/A
Table 2 Note Table 2 Note footnote * A financial instrument is considered held for trading if it has been acquired for the purpose of selling it in the near term, it is part of a portfolio of identified financial instruments that is managed for trading purposes, or it is a derivative. Return to table 2 note * referrer

Measurement

Subsequent to initial recognition and on derecognition, financial instruments are accounted for based on their classification as described in the table below.

Financial instrument categories	Subsequent measurement	Derecognition
Financial assets
Cash and cash equivalents at amortized cost Cash and foreign deposits Debt instruments at amortized cost SPRAs Advances to members of Payments Canada Other receivables Government of Canada treasury bills Canada Mortgage Bonds Government of Canada bonds	Amortized cost using the effective interest method,table 3 note * less any ECLs. ECLs and any subsequent reversals are recognized in net income. Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, unless a financial asset has become credit-impaired, in which case interest revenue is calculated by applying the effective interest rate to its amortized cost net of the ECL provision.	The difference between the financial asset’s carrying amount and the sum of the consideration received and receivable is recognized in net income.
Equity instruments at FVOCI BIS shares	FVOCI. Unrealized changes in the fair value are recognized in other comprehensive income and accumulated in the investment revaluation reserve in Equity. Dividends are recognized in net income when they represent a return on equity and not a return of invested capital to shareholders.	The cumulative unrealized gain or loss previously recognized in other comprehensive income is not reclassified from Equity to net income.
Financial liabilities
Financial liabilities at amortized cost Deposits SSRAs Other liabilities	Amortized cost using effective interest method.table 3 note *	The difference between the financial liability’s carrying amount and the sum of the consideration paid and payable (including any non-cash assets transferred or liabilities assumed) is recognized in net income.
Table 1 Note Table 3 Note footnote * The effective interest method uses the rate inherent in a financial instrument that discounts the estimated future cash flows over the expected life of the financial instrument in order to recognize interest on a constant-yield basis. Return to table 3 note * referrer

Impairment

The Bank calculates a loss allowance for ECLs on investments in debt instruments that are measured at amortized cost, and on foreign currency swap facility commitments and the LVTS guarantee. The amount of ECLs, if any, is updated at each reporting date to reflect changes in credit risk since initial recognition.

The Bank recognizes 12-month ECLs for financial instruments unless there has been a significant increase in credit risk since initial recognition, in which case lifetime ECLs are recognized.

Write-off policy

The Bank writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery. Financial assets written off may still be subject to enforcement activities under the Bank’s recovery procedures. Any recoveries made are recognized in net income.

Accounting estimates and judgments

Impairment

Judgment is required when determining whether there is objective evidence that impairment exists and, if so, the appropriate amount of ECLs to recognize. The measurement of ECLs reflects an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes, the time value of money, and reasonable and supportable information that is available without undue cost or effort at the reporting date regarding past events, current conditions and forecasts of future economic conditions.

Significant judgments required for measuring ECLs include the following:

• determining criteria for assessing whether a financial asset is considered to have low credit risk;
• determining criteria for assessing what constitutes a significant increase in credit risk;
• choosing appropriate models and assumptions for the measurement of ECLs;
• establishing the number and relative weightings of forward-looking scenarios for each type of financial instrument and the associated ECL; and
• establishing groups of similar financial assets for the purposes of measuring ECLs.

Financial assets are categorized into the following three stages depending on their assessed credit risk:

• Stage 1 Financial assets are categorized as Stage 1 when first recognized. The Bank records an allowance for 12-month ECLs in profit or loss, and interest revenue is calculated on the gross carrying amount of the asset.
• Stage 2 Financial assets are categorized as Stage 2 when they have experienced a significant increase in credit risk since initial recognition. The Bank records an allowance for lifetime ECLs, and interest revenue is calculated on the gross carrying amount of the asset.
• Stage 3 Financial assets are categorized as Stage 3 when they are considered credit-impaired. The Bank records an allowance for lifetime ECLs, and interest revenue is calculated based on the net carrying amount of the asset (gross carrying amount less the loss allowance), rather than on its gross carrying amount.

Key concepts

The Bank uses the following key concepts in assessing impairment considerations on its financial assets:

Default	For internal credit risk management purposes, the Bank considers a financial asset in default and therefore Stage 3 (credit-impaired) for ECL calculations in accordance with the contractual terms of the financial asset. The Bank considers treasury and interbank balances in default when the required intraday payments are not settled by the close of business, as outlined in the individual agreements. As a part of a qualitative assessment of a counterparty’s credit risk, the Bank also considers a variety of instances that may indicate unlikeliness to pay. In certain cases, the Bank may consider an event as a significant increase in credit risk as opposed to a true default, as discussed further in the "significant increase in credit risk" definition. When such events occur, the Bank carefully considers whether the event should result in treating the counterparty as defaulted and therefore assessed as Stage 3 for ECL calculations or whether Stage 2 is appropriate. Such events that would be considered include internal assessment of the counterparty indicating default or near-default; the counterparty experiencing unusual liquidity constraints; the counterparty having other past-due liabilities; a significant decrease in the underlying collateral value where the recovery of the loan is expected from the sale of the collateral; and the counterparty’s listed debt or equity suspended at the primary exchange because of rumours or facts about financial difficulties.
Cure	It is the Bank’s policy to consider a financial asset as "cured" and therefore reclassified out of Stage 3 when none of the default criteria has been present for a reasonable period given the nature of the instrument and surrounding circumstances. The decision whether to classify a financial asset as Stage 2 or Stage 1 once cured depends on the updated credit grade at the time of the cure, and whether this indicates there has been a significant increase in credit risk since initial recognition.
Credit-impaired	A financial asset is deemed credit-impaired when one or more events with a detrimental impact on its estimated future cash flows have occurred. Such events could include but are not limited to significant financial difficulty of the counterparty; a breach of contract, such as a default or past-due event; the lenders of the counterparty have granted a concession to the counterparty for economic or contractual reasons relating to the counterparty’s financial difficulty that the lender would not otherwise consider; the likelihood (or probability) that the counterparty will enter bankruptcy or other financial reorganization; or the dissolution of an active market for that financial asset due to financial difficulties.
Significant increase in credit risk	In assessing whether the credit risk on a financial asset has increased significantly since initial recognition, the Bank compares the risk of a default occurring on the financial asset as at the reporting date with the risk as at the date of initial recognition. The Bank considers many factors when assessing a financial asset for a significant increase in credit risk, including an actual or expected significant deterioration in the financial asset’s credit rating; significant deterioration in external market indicators of credit risk for a financial asset (e.g. a significant increase in the credit spread, or the length of time or the extent to which the fair value of a financial asset has been less than its amortized cost); existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the counterparty’s ability to meet its debt obligations; an actual or expected significant deterioration in the operating results of the counterparty; significant increases in credit risk on other financial instruments of the same counterparty; or an actual or expected significant adverse change in the regulatory, economic or technological environment of the counterparty that results in a significant decrease in the counterparty’s ability to meet its debt obligations. In certain cases, the Bank may consider that events identified in the definition of default are a significant increase in credit risk as opposed to a true default. In making this assessment, the Bank considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Bank’s counterparties operate, and consideration of various external sources of actual and forecast economic information relating to the Bank’s core operations. The Bank regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate. The Bank assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the reporting date and monitoring activities do not indicate the presence of a trigger event.
Low credit risk	A financial asset is determined to have low credit risk if the financial asset has a low risk of default; the counterparty has a strong capacity to meet its contractual cash flow obligations in the near term; and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the counterparty to fulfill its contractual cash flow obligations. The Bank considers a financial asset to have low credit risk when the asset’s creditworthiness is judged to be "investment grade," which the Bank broadly defines as equivalent to BBB or higher.

Expected credit loss approach and assessment

Debt instruments

For debt instruments, ECLs are estimated as the difference between all contractual cash flows that are due to the Bank in accordance with the contract and all the cash flows that the Bank expects to receive, discounted at the original effective interest rate.

The Bank’s debt instruments consist solely of Canadian sovereign debt, debt securities that are fully guaranteed by the Government of Canada and instruments that are fully collateralized by collateral with an equivalent credit rating of A- or higher. In assessing ECLs on these instruments, the Bank has applied the low-risk practical expedient available under IFRS 9 due to their high credit quality. The Bank corroborates external credit ratings on Canadian sovereign debt with an internal analysis performed annually, with quarterly updates. The Bank also performs continuous monitoring of relevant economic and financial developments. The Bank has assessed the ECLs for these instruments as negligible.

All the Bank’s financial assets subject to impairment assessments are Stage 1 and are considered to have low credit risk. There were no transfers of financial instruments between stages during the reporting period. The Bank did not record any ECLs on its financial instruments as at December 31, 2018. There are no significant past due or impaired amounts as at December 31, 2018. No impairment was recognized as at December 31, 2017, under IAS 39, or at January 1, 2018, under IFRS 9.

Financial guarantees and loan commitments

This category includes the Bank’s foreign currency swap facility commitments and the LVTS guarantee. For guarantees and commitments made by the Bank that are not currently in use but there is a clear indication that use can reasonably be expected within the next 12 months, the Bank would assess the guarantee or commitment for any impairment on a case-by-case basis based on expected drawings.

For a financial guarantee contract, since the Bank is required to make payments only in the event of a default by the counterparty in accordance with the terms of the instrument that is guaranteed, the ECL allowance would be calculated as the expected payments to reimburse the holder for a credit loss that it incurs, less any amounts that the Bank expects to receive from the holder, the counterparty or any other party.

For undrawn loan commitments, the ECL is the present value of the difference between the contractual cash flows that are due to the Bank if the holder of the loan commitment draws down the loan and the cash flows that the Bank expects to receive if the loan is drawn down.

As at December 31, 2018, none of the Bank’s financial guarantees and commitments were in use, nor does the Bank expect that any will be used within the next 12 months ($nil at December 31, 2017, under IAS 39, and $nil at January 1, 2018, under IFRS 9).

Fair value of financial instruments

Judgment is also required in estimating the fair values of financial instruments. Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable, willing parties.

Financial instruments measured at fair value are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements:

• Level 1 unadjusted quoted prices in active markets for identical assets or liabilities, which represent actual and regularly occurring arm’s-length market transactions
• Level 2 inputs other than quoted prices included in Level 1, which are observable for the assets or liabilities either directly (e.g. prices for similar instruments, prices from inactive markets) or indirectly (e.g. interest rates, credit spreads)
• Level 3 unobservable inputs for the assets or liabilities that are not based on observable market data due to inactive markets (e.g. market participant assumptions)

The fair value hierarchy requires the use of observable market inputs wherever such inputs exist. In measuring fair value, a financial instrument is classified at the lowest level of the hierarchy for which a significant input has been considered.

The tables below explain the valuation methods used to determine the fair value of each financial instrument and its associated level in the fair value hierarchy. There were no changes to valuation methods during the period.

Financial instruments carried at fair value

Valuation method

BIS shares

Significant unobservable inputs (Level 3) Estimated as 70 per cent of the Bank’s interest in the net asset value of the BIS at the reporting date. This is consistent with the methodology applied by the BIS for all share repurchases since the 1970s and was further endorsed in a decision by the International Court at The Hague relating to a share repurchase by the BIS in 2001 (the last share repurchase conducted by the BIS). The Bank expects the value of the BIS shares to fluctuate over time in conjunction with the strength of the BIS balance sheet and exchange rates.

Financial instruments carried at amortized cost	Valuation method
Cash and foreign deposits, SPRAs, other receivables, deposits, and financial liabilities	Carrying amount (approximation to fair value assumed due to their nature as short term or due on demand)
Government of Canada treasury bills, Canada Mortgage Bonds, Government of Canada bonds	Quoted market prices (Level 1 and Level 2)

Supporting information

Financial instruments carried at fair value

Financial instruments carried at fair value are the Bank’s investment in BIS shares (Level 3). There were no transfers of amounts between levels during the reporting period.

The following table reconciles the estimated fair value of the BIS shares determined using Level 3 fair value measurements:

	2018	2017
Fair value of BIS shares at January 1	403.6	395.0
Change in fair value recorded through other comprehensive income	29.7	8.6
Fair value of BIS shares at December 31	433.3	403.6

As discussed in Note 2, the Bank’s investment in Government of Canada treasury bills was reclassified from FVOCI to amortized cost on January 1, 2018. If the Government of Canada treasury bills had not been reclassified, unrealized gains of $7.9 million would have been recorded in Other comprehensive income for the year ended December 31, 2018.

Financial instruments not carried at fair value

The following table shows the fair value of the Bank’s financial instruments classified in accordance with the fair value hierarchy described above for the Bank’s financial instruments that are not carried at fair value and whose fair value does not approximate their carrying value.

As at December 31, 2018	Level 1	Level 2	Level 3	Total
Government of Canada treasury bills	24,225.7	-	-	24,225.7
Canada Mortgage Bonds	252.9	-	-	252.9
Government of Canada bonds	82,134.5	112.5	-	82,247.0
Total	106,613.1	112.5	-	106,725.6

As at December 31, 2017	Level 1	Level 2	Level 3	Total
Government of Canada treasury bills table 4 note *	n.a.	-	-	n.a.
Government of Canada bonds	84,219.7	185.9	-	84,405.6
Total	84,219.7	185.9	-	84,405.6
Table 4 Note Table 4 Note footnote * Prior to the adoption of IFRS 9 on January 1, 2018, Government of Canada treasury bills were classified as AFS, and therefore carried at fair value. The Bank’s investments in Government of Canada treasury bills were composed of $18,370.4 million of investments classified as Level 1 as at December 31, 2017. Return to table 4 note * referrer

Transfers may occur between levels of the fair value hierarchy as a result of changes in market activity, or the availability of quoted market prices or observable inputs. There were no transfers during the year ending December 31, 2018 ($nil during the year ending December 31, 2017). However, during the year, certain fixed-income securities were reclassified from Level 1 to Level 2. The presentation of the figures as at December 31, 2017, has been updated for comparability.

The fair value of all other financial instruments approximates their carrying value.

4. Cash and foreign deposits

Cash and foreign deposits is composed of cash on hand and highly liquid demand deposits in foreign currencies with other central banks or international financial institutions. Included in the total balance of $17.0 million ($14.6 million at December 31, 2017) was Can$15.7 million of foreign deposits (Can$13.8 million at December 31, 2017).

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3, and related financial risks are discussed in Note 7.

5. Loans and receivables

Loans and receivables is composed primarily of SPRAs and, if any, advances to members of Payments Canada. These transactions are obligations of Payments Canada members and are fully collateralized in accordance with publicly disclosed collateral eligibility and margin requirements. The remaining amount is composed primarily of trade receivables.

Securities purchased under resale agreements is composed of overnight repurchase (repo) operations and term repo operations, in which the Bank purchases securities from designated counterparties with an agreement to sell them back at a predetermined price on an agreed transaction date. The overnight repo matures the next business day and is used to support the effective implementation of monetary policy by withdrawing intraday liquidity, thereby reinforcing the Bank’s target for the overnight rate. The term repo generally matures 1 to 90 business days after issuance and is used for balance sheet management, to promote the orderly functioning of Canadian financial markets and to provide the Bank with information on conditions in short-term funding markets. Balances outstanding as at December 31, 2018, consist of agreements with original terms to maturity ranging from 25 to 84 days (from 17 to 84 days at December 31, 2017).

Advances to members of Payments Canada are collateralized liquidity loans made under the Bank’s Standing Liquidity Facility to facilitate overnight settlement in the Large Value Transfer System (LVTS). These advances mature the next business day. Interest on overnight advances is calculated at the Bank Rate, which is the rate of interest that the Bank charges on one-day loans to major financial institutions. Collateral pledged for these advances comes from a pool of eligible collateral in which the Bank has the discretion to choose the highest-quality collateral to cover any advances granted. As at December 31, 2018, there were no advances to members of Payments Canada ($nil at December 31, 2017).

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3, and related financial risks are discussed in Note 7.

6. Investments

The Bank’s investments are composed of Government of Canada treasury bills, Canada Mortgage Bonds, Government of Canada bonds and other investments. As part of the regular management of its balance sheet, the Bank acquires securities to offset its liabilities, which consist mainly of bank notes in circulation and Government of Canada deposits. In November 2018, the Bank announced that it was expanding the assets it would acquire to include Canada Mortgage Bonds, which provides the Bank with more flexibility in the range of high-quality assets it can acquire to offset the continued growth in bank notes.

Other investments is composed solely of the Bank’s holdings of 9,441 BIS shares (9,441 BIS shares at December 31, 2017), which are held as part of its functions as a central bank and are long-standing in nature. Ownership of BIS shares is limited to central banks, and new shares can be acquired only following an invitation to subscribe extended by the BIS Board of Directors. The shares are non-transferable unless prior written consent is obtained from the BIS.

The Bank operates a securities-lending program to support the liquidity of Government of Canada securities by providing the market with a secondary and temporary source of these securities. These transactions are fully collateralized by securities and are generally one business day in duration. Securities lent through the securities-lending program continue to be accounted for as Investments for the duration of the loan period. Lending fees charged by the Bank on these transactions are included in Other revenue at the loan maturity date. As at December 31, 2018, the Bank was not engaged in any securities-lending activities ($nil at December 31, 2017).

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3, and related financial risks are discussed in Note 7.

7. Financial risk management

The Bank maintains a comprehensive risk management and control framework to manage its risks. The Executive Council oversees enterprise risk management and the implementation of sound management processes to safeguard the Bank. The Board of Directors has an oversight role in the Bank’s performance of risk management.

The Bank is exposed to financial risks associated with its financial instruments, including credit risk, market risk and liquidity risk. The Financial Risk Office monitors and reports on the financial risks related to the Bank’s statement of financial position.

The following is a description of those risks and how the Bank manages its exposure to them.

Credit risk

Credit risk is the possibility of loss due to the failure of a counterparty or guarantor to meet payment obligations in accordance with agreed-upon terms.

The Bank is exposed to credit risk through its cash and foreign deposits, investments and advances to members of Payments Canada, and through market transactions conducted in the form of SPRAs and loans of securities. The maximum exposure to credit risk is estimated to be the carrying value of those items. The Bank is also exposed to credit risk through its guarantee of the LVTS and through the execution of foreign currency contracts. The maximum exposure under guarantees and foreign currency contracts is discussed in Note 16.

There are no past due or impaired amounts.

Concentration of credit risk

The Bank’s investment portfolio represents 90% of the carrying value of its total assets (91% in 2017). The credit risk associated with the Bank’s investment portfolio is low because the securities held are primarily direct obligations of the Government of Canada or are fully guaranteed by the Government of Canada, which holds a credit rating of AAA and has no history of default.

SPRAs represent 9% of the carrying value of the Bank’s total assets (9% at December 31, 2017). The fair value of collateral pledged to the Bank against these financial instruments at the end of the reporting period is presented below.

	2018		2017
As at December 31	$	%	$	%
Securities issued or guaranteed by the Government of Canada	469.1	4.2	2,414.9	24.5
Securities issued or guaranteed by a provincial government	10,695.5	95.8	7,444.0	75.5
Total fair value of collateral pledged to the Bank	11,164.6	100.0	9,858.9	100.0
Carrying value of advances to members of Payments Canada	-	-	-	-
Carrying value of SPRAs	10,673.0	100.0	9,478.5	100.0
Carrying value of collateralized securities	10,673.0	100.0	9,478.5	100.0
Collateral as a percentage of carrying value		104.6		104.0

In the unlikely event of a counterparty default, collateral can be liquidated to offset credit exposure. Collateral is taken in accordance with the Bank’s publicly disclosed eligibility criteria and margin requirements, which are accessible on its website. Strict eligibility criteria are set for all collateral, and the credit quality of collateral is managed through a set of restrictions based on asset type, term to maturity and credit attributes, including ratings of the securities pledged.

Market risk

Market risk is the potential for adverse changes in the fair value or future cash flows of a financial instrument due to changes in market variables, such as interest rates, foreign exchange rates and market prices. It is composed of interest rate risk, currency risk and other price risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.

The Bank’s exposure to interest rate risk arises from fluctuations in the future cash flows of cash and foreign deposits held by the Bank and deposits held at the Bank by other institutions, since these instruments are subject to variable interest rates. The remainder of the Bank’s financial assets and liabilities have either fixed interest rates or are non-interest-bearing.

The numbers below show the effect as at December 31 of an increase/(decrease) in interest rates of 25 basis points on the interest paid on Government of Canada deposits, which represent substantially all of the Bank’s interest rate risk exposure on financial liabilities.

As at December 31	2018	2017
Interest expense on Government of Canada deposits	57.3 / (57.3)	58.1 / (58.1)

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Given the small size of the Bank’s net foreign currency exposure relative to its total assets, currency risk is not considered significant.

The Bank is exposed to currency risk primarily by holding shares in the BIS. These shares are denominated in Special Drawing Rights (SDRs). The SDR serves as the unit of account for the International Monetary Fund (IMF), and its value is based on a “basket” of five major currencies: the euro, the US dollar, the British pound, the Japanese yen and the Chinese renminbi. SDRs are translated into Canadian-dollar equivalents at the rates prevailing on the date when the fair value is determined.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices (other than those arising from changes in interest and exchange rates).

The Bank is exposed to other price risk through its investment in the BIS. As discussed in Note 3, the fair value of these shares is estimated on the basis of the net asset value of the BIS, less a discount of 30%. Accordingly, the fair value fluctuations of these shares reflect movements in the net asset value of the BIS and exchange rates as discussed above. The other price risk associated with BIS shares is incidental to the reason for holding them, as discussed in Note 6.

Liquidity risk

Liquidity risk is the potential for loss if the Bank is unable to meet its financial obligations as they fall due. Liabilities with no fixed maturity include bank notes in circulation and Government of Canada deposits, with the remaining liabilities (deposits of members of Payments Canada, SSRAs (if any) and other financial liabilities) due within 12 months. The Bank is also exposed to liquidity risk through its guarantee of the LVTS, as discussed in Note 16.

Historical experience has shown that bank notes in circulation provide a stable source of long-term funding for the Bank. Government of Canada deposits are deposits held in the Bank’s capacity as the Government of Canada’s fiscal agent. As a counterpart to these liabilities with no fixed maturity, the Bank holds a portfolio of highly liquid securities, composed primarily of Government of Canada treasury bills, Canada Mortgage Bonds, Government of Canada bonds and SPRAs. In the event of an unexpected redemption of bank notes or a significant withdrawal from the Government of Canada’s deposit for the prudential liquidity-management plan, the Bank can settle the obligation by means of several tools, including the sale of investments backing those liabilities.

Also, as the nation’s central bank, the Bank is the ultimate source of liquid funds to the Canadian financial system and has the power and operational ability to create Canadian-dollar liquidity in unlimited amounts at any time. This power is exercised within the Bank’s commitment to keeping inflation low, stable and predictable.

The following table presents a maturity analysis of the Bank’s financial assets and liabilities. The balances in this table do not correspond to the balances in the statement of financial position since the table presents all cash flows on an undiscounted basis.

As at December 31, 2018	No fixed maturity	Within 12 months	1 to 5 years	Over 5 years	Total
FINANCIAL ASSETS
Cash and foreign deposits	17.0	-	-	-	17.0
Loans and receivables	-	10,687.3	-	-	10,687.3
Investments
Government of Canada treasury bills	-	24,375.0	-	-	24,375.0
Canada Mortgage Bonds	-	-	253.2	-	253.2
Government of Canada bonds	-	16,744.3	42,287.8	33,543.4	92,575.5
BIS shares	433.3	-	-	-	433.3
	450.3	51,806.6	42,541.0	33,543.4	128,341.3
FINANCIAL LIABILITIES
Bank notes in circulation	90,193.1	-	-	-	90,193.1
Deposits
Government of Canada	21,725.6	-	-	-	21,725.6
Members of Payments Canada	-	250.5	-	-	250.5
Other deposits	2,830.1	-	-	-	2,830.1
Other financial liabilities	-	303.2	-	-	303.2
	114,748.8	553.7	-	-	115,302.5
Net maturity difference	(114,298.5)	51,252.9	42,541.0	33,543.4	13,038.8

As at December 31, 2017	No fixed maturity	Within 12 months	1 to 5 years	Over 5 years	Total
FINANCIAL ASSETS
Cash and foreign deposits	14.6	-	-	-	14.6
Loans and receivables	-	9,495.6	-	-	9,495.6
Investments
Government of Canada treasury bills	-	18,450.0	-	-	18,450.0
Government of Canada bonds	-	17,139.3	43,069.8	34,930.4	95,139.5
BIS shares	403.6	-	-	-	403.6
	418.2	45,084.9	43,069.8	34,930.4	123,503.3
FINANCIAL LIABILITIES
Bank notes in circulation	85,855.9	-	-	-	85,855.9
Deposits
Government of Canada	21,454.2	-	-	-	21,454.2
Members of Payments Canada	-	500.3	-	-	500.3
Other deposits	2,274.3	-	-	-	2,274.3
Other financial liabilities	-	277.3	-	-	277.3
	109,584.4	777.6	-	-	110,362.0
Net maturity difference	(109,166.2)	44,307.3	43,069.8	34,930.4	13,141.3

8. Property and equipment

Property and equipment consists of land, buildings, computer equipment, other equipment and related projects in progress.

Accounting policy

Property and equipment is measured at cost less accumulated depreciation, except for land, which is not depreciated, and is net of any related impairment losses. Projects in progress are measured at cost but are not depreciated until the asset is available for use. Cost includes expenditures that are directly attributable to the acquisition or construction of the asset.

When major components of an item of property and equipment have different useful lives, they are accounted for as separate items of property and equipment. Upon replacing a significant part of an item of property and equipment, the carrying amount of the replaced part is derecognized and any gain or loss is recognized in depreciation.

Depreciation is calculated using the straight-line method and is applied over the estimated useful lives of the assets. The estimated useful lives and the depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The estimated useful lives for major asset classes are as follows:

• Buildings 15 to 65 years
• Computer equipment 3 to 10 years
• Other equipment 5 to 20 years

Leasehold improvements (included in Other equipment) are depreciated over the lesser of their useful life or the term of the lease.

Accounting estimates and judgments

Judgment is required when determining

• which costs are directly attributable to a fixed asset (e.g. labour, overhead, etc.);
• when income or expenses derived from projects in progress are recognized as part of the asset cost;
• the appropriate useful life over which such costs should be depreciated; and
• whether existing assets are subject to impairment.

Supporting information

Carrying value of property and equipment

2018	Land and buildings	Computer equipment	Other equipment	Total
Cost
Balances as at December 31, 2017	578.5	82.4	81.9	742.8
Additions	-	60.1	8.5	68.6
Disposals	(2.7)	-	(13.2)	(15.9)
Transfers to other asset categories	-	-	-	-
Balances as at December 31, 2018	575.8	142.5	77.2	795.5
Depreciation
Balances as at December 31, 2017	(106.1)	(34.0)	(33.7)	(173.8)
Depreciation expense	(18.3)	(12.7)	(6.3)	(37.3)
Disposals	2.7	-	13.2	15.9
Transfers to other asset categories	-	-	-	-
Balances as at December 31, 2018	(121.7)	(46.7)	(26.8)	(195.2)
Carrying amounts
Balances as at December 31, 2017	472.4	48.4	48.2	569.0
Balances as at December 31, 2018	454.1	95.8	50.4	600.3

2018	Land and buildings	Computer equipment	Other equipment	Total
Projects in progress
Included in Carrying amounts at December 31, 2018	1.0	60.4	8.3	69.7
Commitments at December 31, 2018	1.1	11.8	4.2	17.1

The commitments at December 31, 2018, consist primarily of computer and mechanical equipment related to resiliency initiatives.

2017	Land and buildings	Computer equipment	Other equipment	Total
Cost
Balances as at December 31, 2016	560.8	68.8	113.8	743.4
Additions	21.2	11.4	10.4	43.0
Disposals	(2.9)	(1.0)	(37.0)	(40.9)
Transfers to other asset categories	(0.6)	3.2	(5.3)	(2.7)
Balances as at December 31, 2017	578.5	82.4	81.9	742.8
Depreciation
Balances as at December 31, 2016	(90.3)	(23.1)	(59.3)	(172.7)
Depreciation expense	(18.7)	(11.6)	(11.3)	(41.6)
Disposals	2.9	0.7	36.9	40.5
Transfers to other asset categories	-	-	-	-
Balances as at December 31, 2017	(106.1)	(34.0)	(33.7)	(173.8)
Carrying amounts
Balances as at December 31, 2016	470.5	45.7	54.5	570.7
Balances as at December 31, 2017	472.4	48.4	48.2	569.0

2017	Land and buildings	Computer equipment	Other equipment	Total
Projects in progress
Included in Carrying amounts at December 31, 2017	-	3.8	3.1	6.9
Commitments at December 31, 2017	0.9	13.6	1.1	15.6

9. Intangible assets

Intangible assets are identifiable non-monetary assets without physical substance that represent future economic benefits and are controlled by the Bank. The Bank’s intangible assets consist of computer software that has been internally developed or externally acquired.

Accounting policy

Costs that are directly associated with the internal development of identifiable software are recognized as intangible assets if, in management’s best estimate, the asset can technically be completed and will provide a future economic benefit to the Bank. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

Computer software assets that are acquired by the Bank and have finite useful lives are measured at cost less accumulated amortization and impairment losses.

Amortization is calculated using the straight-line method and is applied over the estimated useful lives of the assets, which may vary from 3 to 15 years. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.

Accounting estimates and judgments

Judgment is required when determining

• which costs related to non-tangible expenditures are eligible for capitalization;
• the appropriate useful life over which such costs should be amortized; and
• whether existing assets are subject to impairment.

Supporting information

Carrying value of intangible assets

2018	Internally generated software	Other software	Total
Cost
Balances as at December 31, 2017	58.7	71.6	130.3
Additions	4.0	9.7	13.7
Disposals	-	-	-
Transfers to other asset categories	-	-	-
Balances as at December 31, 2018	62.7	81.3	144.0
Amortization
Balances as at December 31, 2017	(44.7)	(45.5)	(90.2)
Amortization expense	(2.7)	(7.1)	(9.8)
Disposals	-	-	-
Transfers to other asset categories	-	-	-
Balances as at December 31, 2018	(47.4)	(52.6)	(100.0)
Carrying amounts
Balances as at December 31, 2017	14.0	26.1	40.1
Balances as at December 31, 2018	15.3	28.7	44.0

2018	Internally generated software	Other software	Total
Projects in progress
Included in Carrying amounts at December 31, 2018	0.2	7.8	8.0
Commitments at December 31, 2018	7.4	1.4	8.8

2017	Internally generated software	Other software	Total
Cost
Balances as at December 31, 2016	53.4	63.1	116.5
Additions	5.3	5.8	11.1
Disposals	-	-	-
Transfers from other asset categories	-	2.7	2.7
Balances as at December 31, 2017	58.7	71.6	130.3
Amortization
Balances as at December 31, 2016	(42.5)	(37.8)	(80.3)
Amortization expense	(2.2)	(7.7)	(9.9)
Disposals	-	-	-
Transfers from other asset categories	-	-	-
Balances as at December 31, 2017	(44.7)	(45.5)	(90.2)
Carrying amounts
Balances as at December 31, 2016	10.9	25.3	36.2
Balances as at December 31, 2017	14.0	26.1	40.1

2017	Internally generated software	Other software	Total
Projects in progress
Included in Carrying amounts at December 31, 2017	7.7	3.7	11.4
Commitments at December 31, 2017	1.2	3.1	4.3

10. Other assets

Other assets is composed of bank note inventory (production materials, including the polymer substrate and ink), the net defined-benefit asset related to the Bank of Canada Pension Plan, and all other assets, which are primarily prepaid expenses.

Accounting policy

Bank note inventory is measured at the lower of the cost or the net realizable value. The cost to produce finished bank notes is expensed as incurred. All other assets are recorded at amortized cost using the effective interest method.

The accounting policy for the net defined-benefit asset related to the Bank of Canada Pension Plan is discussed in Note 14.

Supporting information

Composition of other assets

As at December 31	Note	2018	2017
Bank note inventory		12.1	7.2
Net defined-benefit asset	14	149.5	109.0
All other assets		28.1	16.4
Total other assets		189.7	132.6

11. Bank notes in circulation

Bank notes in circulation represents those bank notes that have been produced and issued for use in the economy. They are non-interest-bearing liabilities and are due on demand.

Accounting policy

Bank notes in circulation are recorded at face value. The fair value of bank notes in circulation approximates their carrying value. The Bank’s assessment of related financial risks is discussed in Note 7.

Supporting information

In accordance with the Bank of Canada Act, the Bank has the sole authority to issue bank notes for circulation in Canada. Currently, bank notes are issued in denominations of $5, $10, $20, $50 and $100. Other bank notes, as described in the table below, are denominations that are still in circulation but are no longer issued.

The face value of notes in circulation, presented by denomination, is as follows:

As at December 31	2018	2017
$5	1,428.7	1,346.9
$10	1,632.8	1,503.4
$20	19,570.2	19,946.4
$50	16,405.6	14,845.5
$100	50,111.6	47,099.1
Other bank notes	1,044.2	1,114.6
Total bank notes in circulation	90,193.1	85,855.9

12. Deposits

Deposits is composed of deposits by the Government of Canada, members of Payments Canada and other financial institutions, and also includes unclaimed balances remitted to the Bank in accordance with governing legislation. The Bank pays interest on the deposits for the Government of Canada, members of Payments Canada and some other financial institutions at short-term market rates. The Bank pays interest on unclaimed balances in accordance with governing legislation. Interest expense on deposits is included in net income.

Deposits from the Government of Canada were $21,725.6 million as at December 31, 2018 ($21,454.2 million as at December 31, 2017). They consist of $1,725.6 million for operational balances and $20,000.0 million held for the prudential liquidity-management plan ($1,454.2 million and $20,000.0 million, respectively, at December 31, 2017).

The Bank’s policies on classifying and measuring financial instruments are discussed in Note 3, and related financial risks are discussed in Note 7.

13. Other liabilities

Other liabilities consists of accounts payable and accrued liabilities, provisions and the net defined-benefit liability of the Bank of Canada Supplementary Pension Arrangement and other employee benefit plans.

Accounting policy

The Bank’s policies on classifying and measuring financial instruments (accounts payable and accrued liabilities, within the context of Other liabilities) are discussed in Note 3, and related financial risks are discussed in Note 7. The Bank’s accounting policy for the net defined-benefit liability of the Bank of Canada Pension Supplementary Arrangement and other employee benefit plans is discussed in Note 14.

A provision is recognized if, as a result of a past event, the Bank has a present legal or constructive obligation that can be estimated reliably as at the statement of financial position date, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Accounting estimates and judgments

Estimates for provisions consider the present value of the cash flows expected to be required to settle the obligation.

Supporting information

Composition of other liabilities

As at December 31	Note	2018	2017
Surplus payable to the Receiver General for Canada		225.9	204.2
Net defined-benefit liability	14
Pension benefit plans		66.2	64.4
Other benefit plans		160.9	178.3
All other liabilities and provisions		77.3	73.1
Total other liabilities		530.3	520.0

Surplus payable to the Receiver General for Canada

The following table reconciles the opening and closing balances of the surplus payable to the Receiver General for Canada, which is based on the requirements of section 27 of the Bank of Canada Act and the Bank’s remittance agreement with the Minister of Finance, as discussed in Note 17.

As at December 31	Note	2018	2017
Opening balance at beginning of year (as restated)	2	213.9	468.8
Remittance of surplus to the Receiver General for Canada		(1,204.2)	(1,193.7)
Surplus for the Receiver General for Canada		1,216.2	929.1
Closing balance at end of year		225.9	204.2

14. Employee benefits

The Bank provides employees with several employee benefit plans, consisting of short-term employee benefits, post-employment benefits, long-term employee benefits and termination benefits.

The Bank of Canada Pension Plan (the Pension Plan) was established under the provisions of the Bank of Canada Act, 1934, and has remained in accordance with the Bank of Canada Act as subsequently amended. The Pension Plan is a registered pension plan as defined in the Income Tax Act (ITA) and, consequently, is not subject to income taxes.

The Bank of Canada Supplementary Pension Arrangement (SPA) was created to pay pension benefits to Bank employees with annual earnings above the amount covered by the Pension Plan, as provided under the ITA. The Supplementary Trust Fund, which holds and invests the funds of the SPA, is a retirement compensation arrangement as defined in the ITA.

The Bank is the administrator of the pension plans. The Bank’s Board of Directors has established a Pension Committee and has delegated to it the responsibility for carrying out the Bank’s duties as administrator of the plans, including adherence to the guidelines established in the Statement of Investment Policy and Procedures (SIPP) for each plan, which are approved annually by the Board. A separate trust fund has been established for each plan to receive and invest contributions and pay benefits due under the plans. The assets cannot be used for any purpose other than payment of pension benefits and related administration fees.

The Bank also sponsors other benefit plans provided to employees, specifically the unfunded post-employment defined-benefit plans for life insurance and eligible health and dental benefits, the unfunded long-service benefit program for employees hired before January 1, 2003, and the long-term disability program.

Accounting policy

Employee benefits refer to all forms of consideration given by an entity in exchange for services rendered by employees or for the termination of employment as described in the following table:

Category	Description	Measurement and recognition
Short-term employee benefits	Benefits expected to settle wholly within 12 months of when the service was rendered. Refers to salary, bonus, annual leave, health benefits, dental care and statutory benefits.	The liability and related expense are recognized in the reporting period in which they occur and are measured on an undiscounted basis.
Post-employment benefits	Benefits payable after the completion of employment (pension plans and other benefits). Refers to the Pension Plan, the SPA, life insurance and eligible health and dental benefits, and the long-service benefit program.	The net asset or liability recognized is composed of the present value of the defined-benefit obligation less the fair value of plan assets, when applicable. The defined-benefit obligation is calculated by discounting estimated future cash flows using an appropriate interest rate. table 35 note * The plan assets of funded benefit plans are measured at their fair value at the end of the reporting period. The expense recognized in net income for the reporting period consists of current service costs, past service costs, net interest on the net defined-benefit liability/asset, gains or losses arising on settlement (if applicable) and administrative costs. Net interest is calculated by applying the discount rate to the net defined-benefit liability/asset. Remeasurements table 35 note † are recognized immediately in other comprehensive income in the reporting period in which they occur and are accumulated in Equity. Remeasurements comprise actuarial gains and losses, the return on plan assets and the effect of the asset ceiling (if applicable). They exclude amounts included in net interest on the net defined-benefit liability/asset. Past service costs are recognized at the earlier of when the plan amendment or curtailment occurs, or when the Bank recognizes related restructuring costs or termination benefits.
Long-term employee benefits	Refers to the long-term disability program.	The liability recognized is the present value of the defined-benefit obligation, calculated by discounting estimated future cash flows using an appropriate interest rate. table 35 note * The expense recognized in net income for the reporting period consists of current service costs, interest costs, remeasurement gains and losses, and past service costs. The current service costs and the benefit obligations of the plan are actuarially determined on an event-driven accounting basis.
Termination benefits	Benefits provided in exchange for termination.	The liability and related expense is recognized in net income at the earlier of when the Bank can no longer withdraw the offer of the termination benefit or when the Bank recognizes any related restructuring costs.
Table 35 notes Table 35 note * The interest rate used is based on those of AA-rated Canadian corporate bonds with terms to maturity approximating the estimated duration of the obligation. Return to table 35 note * referrer Table 35 note † The current service costs and the benefit obligations of the plans are actuarially determined using the projected unit credit method. Return to table 35 note † referrer

Accounting estimates and judgments

The cost of the defined-benefit pension plans and other benefit plans and the present value of the benefit obligations are determined using actuarial valuations. An actuarial valuation involves using various assumptions determined by management and reviewed annually by the actuary that may differ from future developments. These assumptions include

• discount rates,
• inflation rates,
• rates of compensation increases,
• rates of pension increases,
• medical cost trends, and
• mortality rates.

The most recent actuarial valuation for the purposes of funding the pension plans was done as at January 1, 2018, and the next required valuation will be as at January 1, 2019. Benefits are based on years of service and the average full-time salary for the best five consecutive years. They are indexed to reflect changes in the consumer price index on the date payments begin and each January 1 thereafter.

The significant assumptions used are as follows (on a weighted-average basis):

	Pension benefit plans		Other benefit plans
As at December 31	2018	2017	2018	2017
Defined-benefit obligation
Discount rate table 36 note *	4.00%	3.50%	3.90%	3.44%
Inflation rate table 36 note †	2.00%	2.00%	n.a.	n.a.
Rate of compensation increase	3.00%	3.00%	3.00%	3.00%
	+ merit	+ merit	+merit	+ merit
Mortality table table 36 note ‡	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)	CPM2014Publ (scale CPM-B)
Benefit plan expense
Discount rate table 36 note *	3.50%	3.90%	3.10 – 3.50%	3.20 – 4.00%
Inflation rate table 36 note †	2.00%	2.00%	n.a.	n.a.
Rate of compensation increase	3.00%	3.00%	3.00%	3.20%
	+ merit	+ merit	+merit	+ merit
Assumed medical cost trend
Medical cost trend rate	n.a.	n.a.	5.12 – 4.00%	5.57 – 4.50%
Year that the rate reaches the ultimate trend rate	n.a.	n.a.	2040	2029
Table 36 notes Table 36 note * The parameter most subject to change is the discount rate, which is determined by reference to Canadian AA-rated corporate bonds with terms to maturity approximating the duration of the obligation. The weighted-average duration of the defined-benefit obligation is approximately 17 to 18 years for the pension benefit plans (17 to 18 years in 2017) and 6 to 22 years for the other benefit plans (6 to 23 years in 2017). Return to table 36 note * referrer Table 36 note † "Other benefit plans" does not include an inflation rate adjustment since the adjustment is a component of Assumed medical cost trend. Return to table 36 note † referrer Table 36 note ‡ In 2018, the assumption for life expectancy for the plan valuations assumes that a male member reaching 60 will live for approximately 28 years (27 years in 2017) and a female member approximately 30 years (29 years in 2017). Return to table 36 note ‡ referrer

The mortality assumptions used in the plan valuations are based on tables issued by the Canadian Institute of Actuaries. Actuarial adjustments to the tables are applied when recommended by the plan’s actuaries.

Sensitivity analysis

Due to the complexities involved in the valuation and its long-term nature, a defined-benefit obligation is highly sensitive to changes in these assumptions.

The following table outlines the potential impact of changes in certain key assumptions used in measuring the defined-benefit obligations and benefit costs.

	Increase (decrease) in obligation table 37 note *
	Pension benefit plans	Other benefit plans
Discount rate
Impact of 0.10% increase	(28.4)	(2.6)
Impact of 0.10% decrease	29.2	2.6
Rate of compensation increase
Impact of 0.10% increase	5.3	0.3
Impact of 0.10% decrease	(5.2)	(0.3)
Mortality rate
Impact of 10.00% increase	(35.2)	(2.0)
Impact of 10.00% decrease	39.0	2.4
Inflation rate
Impact of 0.10% increase	26.0	n.a.
Impact of 0.10% decrease	(25.4)	n.a.
Medical cost trend rates
Impact of 1.00% increase	n.a.	26.4
Impact of 1.00% decrease	n.a.	(20.6)
Table 37 note Table 37 note * The sensitivity analysis presented in this table is hypothetical and should be used with caution. The analysis is based on a change in assumptions while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. The method and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year. Return to table 37 note * referrer

Supporting information

The changes to the net defined-benefit asset (liability) for the year are as follows:

	Pension benefit plans		Other benefit plans
	2018	2017	2018	2017
Fair value of plan assets
Fair value of plan assets as at January 1	1,868.3	1,701.6	-	-
Interest income	65.0	66.2	-	-
Remeasurement gains (losses)
Return on plan assets table 38 note *	(85.0)	117.1	-	-
Bank contributions	21.4	29.6	-	-
Employee contributions	16.0	12.2	-	-
Benefit payments and transfers	(57.3)	(56.3)	-	-
Administration costs	(2.3)	(2.1)	-	-
Fair value of plan assets as at December 31	1,826.1	1,868.3	-	-
Defined-benefit obligation
Benefit obligation as at January 1	1,823.7	1,608.6	178.3	172.0
Current service cost	50.9	42.2	5.4	5.3
Interest cost	64.8	63.3	6.2	6.7
Past service cost	-	-	-	0.8
Employee contributions	16.0	12.2	-	-
Remeasurement (gains) losses
Arising from changes in demographic assumptions	-	(2.7)	-	-
Arising from changes in experience	(1.4)	41.3	-	-
Arising from changes in financial assumptions	(153.9)	115.1	(21.6)	1.0
Benefit payments and transfers	(57.3)	(56.3)	(7.4)	(7.5)
Defined-benefit obligation as at December 31	1,742.8	1,823.7	160.9	178.3
Net defined-benefit asset (liability)	83.3	44.6	(160.9)	(178.3)
Net defined-benefit asset	149.5	109.0	-	-
Net defined-benefit liability	(66.2)	(64.4)	(160.9)	(178.3)
Net defined-benefit asset (liability)	83.3	44.6	(160.9)	(178.3)
Benefit plan expenses recognized in net income	53.0	41.4	11.1	13.3
Remeasurement losses (gains) recognized in other comprehensive income	(70.3)	36.6	(21.1)	0.5
Table 38 note Table 38 note * The return on plan assets excludes interest income. Return to table 38 note * referrer

The defined-benefit obligation, presented by membership category, is as follows:

	Pension benefit plans		Other benefit plans
As at December 31	2018	2017	2018	2017
Membership category
Active members	694.7	757.6	77.7	87.8
Pensioners	949.8	956.1	83.2	90.5
Deferred members	98.3	110.0	-	-
Total defined-benefit obligation	1,742.8	1,823.7	160.9	178.3

The cumulative remeasurement losses recognized in other comprehensive income are as follows:

	Pension benefit plans		Other benefit plans
As at December 31	2018	2017	2018	2017
Cumulative remeasurement losses recognized, beginning of year	(248.8)	(212.2)	(17.3)	(16.8)
Remeasurement gains (losses) recognized in current year	70.3	(36.6)	21.1	(0.5)
Cumulative remeasurement gains (losses) recognized, end of year	(178.5)	(248.8)	3.8	(17.3)

Pension benefit plans asset mix

The pension plans’ SIPPs require that investments be held in a diversified mix of asset types and also set out requirements for investment eligibility. The diversification of assets serves to decrease the variations in the expected return performance of the portfolio. For the Pension Plan, the current practice is to conduct an asset-liability modelling (ALM) study every three years. The ALM assists the Pension Committee in establishing an asset allocation that is consistent with the Pension Plan’s objectives and the Bank’s risk tolerance. The latest ALM report was prepared and presented to the Pension Committee in September 2018.

The pension plans’ investments are subject to credit, liquidity and market risks, the latter being the most significant risk due to the volatility of the assets. The pension plans’ liabilities are calculated using a discount rate determined by reference to Canadian AA-rated corporate bonds; a rate of return on plan assets inferior to the discount rate would result in a deficit. Requirements for asset diversification and investment eligibility serve as basic risk management tools for the investment portfolio.

The pension benefit plans assets consist of the following:

	2018				2017
As at December 31	Quoted	Unquoted	Total	%	Quoted	Unquoted	Total	%
Money market instruments	10.5	-	10.5	0.6	11.9	-	11.9	0.6
Equity instruments
Canadian equity funds	298.3	-	298.3	16.3	333.8	-	333.8	17.9
Foreign equity funds	474.1	-	474.1	26.0	573.2	-	573.2	30.7
Debt instruments table 41 note *
Securities issued or guaranteed by the Government of Canada	134.5	-	134.5	7.4	137.4	-	137.4	7.3
Securities issued or guaranteed by a provincial government	130.2	-	130.2	7.1	117.1	-	117.1	6.3
Fixed-income funds	399.1	-	399.1	21.9	392.9	-	392.9	21.0
Other securities	6.4	-	6.4	0.3	7.9	-	7.9	0.4
Real estate funds	-	332.9	332.9	18.2	-	257.2	257.2	13.8
SPA statutory deposit	-	40.1	40.1	2.2	-	36.9	36.9	2.0
	1,453.1	373.0	1,826.1	100.0	1,574.2	294.1	1,868.3	100.0
Table 41 note Table 41 note * Debt instruments consist of fixed-income securities and inflation-linked assets. Return to table 41 note * referrer

Total cash payments

Regulations governing federally regulated pension plans establish certain solvency requirements calculated under the assumption that the plans are terminated at the valuation date. In addition, actuarial valuations for funding purposes are required annually under the Pension Benefits Standards Act. The actuarial valuations of the Pension Plan completed as at January 1, 2018, reflect the Pension Plan’s strong performance in 2017.

On a solvency basis (which assesses the Pension Plan on the assumption that it would be terminated on the date of the valuation), the funding status of the Pension Plan had a solvency ratio of 111 per cent (104 per cent as at January 1, 2017). The valuation reported a solvency surplus of $169.4 million and a three-year average solvency surplus of $86.7 million ($66.5 million and $41.8 million, respectively, for the valuation completed at January 1, 2017).

On a going-concern basis (which assesses the Pension Plan over the long term on the assumption that it will operate indefinitely), the Pension Plan had a funding ratio of 140 per cent (135 per cent as at January 1, 2017). The valuation reported a going-concern surplus of $478.1 million ($410.2 million for the valuation completed at January 1, 2017).

The funding requirements of the Pension Plan are determined by the going-concern and solvency valuation results. Given the Pension Plan’s January 1, 2018, funding and solvency ratios, regulations under the ITA prohibited the Bank from making further contributions after June 2018. Bank contributions to the Pension Plan will resume depending on the results of actuarial valuations in subsequent years, with the next one scheduled for January 1, 2019. Contributions in 2019 will be based on the actuarial valuation as at January 1, 2019, and the Bank anticipates that, if the results of 2018 are in line with actuarial assumptions, its contributions will not resume in 2019 ($14.0 million in contributions to the Pension Plan were made by the Bank in 2018).

15. Leases

The Bank occupies leased premises throughout Canada, including in Ottawa, Halifax, Montréal, Toronto, Calgary and Vancouver.

Accounting policy

Payments made for leases classified as operating leases are charged to net income on a straight-line basis over the term of the lease. The Bank is not party to any significant finance leases.

Supporting information

The minimum payments are determined at the beginning of the lease and may vary during its term. Contingent rent on premises leases is based on building operating costs. The expiry dates vary for each lease, ranging from fiscal 2019 to 2027.

The future minimum payments for rent, real estate taxes and building operations as at December 31, 2018, are presented below.

As at December 31	2018
Due within one year	3.9
Due within one to five years	14.8
Due later than five years	6.9
Total premises lease commitments	25.6
Lease payments expensed	3.8

16. Commitments, contingencies and guarantees

Commitments

A commitment is an enforceable, legally binding agreement to make a payment in the future for the purchase of goods or services. These amounts are not recorded in the statement of financial position since the Bank has not yet received the goods or services from the supplier. The amounts below are what the Bank has committed to pay based on current expected contract prices.

Commitments related to Property and equipment, Intangible assets and Leases are discussed in Note 8, Note 9 and Note 15, respectively.

The Bank has a long-term contract with an outside service provider for retail debt services that expires in 2021. As at December 31, 2018, fixed payments totalling $50.9 million remained, plus a variable component based on the volume of transactions.

The Bank has long-term contracts with outside service providers for business recovery and data centre services, which expire between 2022 and 2026. As at December 31, 2018, fixed payments totalling $49.5 million remained.

As at December 31, 2018, the total minimum payments for long-term contracts, other than leases, property and equipment, and intangible assets, were as follows:

As at December 31	2018
Due within one year	33.9
Due within one to three years	57.3
Due within three to five years	7.0
Thereafter	2.2
Total minimum payments	100.4

Foreign currency swap facilities

The Bank is a counterparty to several foreign currency swap facilities as follows:

As at December 31, 2018	Denominated in	Expiry date	Maximum available
Bilateral liquidity swap facilities with other central banks
Bank of England	British pounds	No expiry	Unlimited
Bank of Japan	Japanese yen	No expiry	Unlimited
Bank of Korea	South Korean won	No expiry	Unlimited
European Central Bank	euros	No expiry	Unlimited
Federal Reserve Bank of New York	US dollars	No expiry	Unlimited
Swiss National Bank	Swiss francs	No expiry	Unlimited
People’s Bank of China	renminbi	November 8, 2020	200,000.0
Other swap facilities
Exchange Fund Account of Canada	Canadian dollars	No expiry	Unlimited
Federal Reserve Bank of New York	US dollars	December 12, 2019	2,000.0
Banco de México	Canadian dollars	December 12, 2019	1,000.0
Bank for International Settlements	Canadian dollars	No expiry	100.0

Bilateral liquidity swap facilities with other central banks

The bilateral liquidity swap facilities were established to provide liquidity in each jurisdiction in any of their currencies, should market conditions warrant.

These facilities can be structured as either a Canadian-dollar liquidity swap or a foreign-currency liquidity swap arrangement and can be initiated by either party. The exchange rate applicable to the swap facilities is based on the prevailing market spot exchange rate as mutually agreed upon by the parties.

Other swap facilities

The other swap facilities established with the Federal Reserve Bank of New York and with the Banco de México, which expire on December 12, 2019, have indefinite terms and are subject to annual renewal.

The Bank is party to a standing foreign currency swap facility with the Exchange Fund Account of Canada. There is no stated maximum amount under this agreement.

The Bank is also party to a swap facility with the BIS for operational purposes. Transactions executed under this agreement are generally one business day in duration. The BIS swap was accessed for operational purposes in 2018 and was not accessed in 2017. None of the other liquidity or other swaps were accessed, by either party, in 2018 or 2017. No related commitments existed as at December 31, 2018 ($nil as at December 31, 2017).

Contingencies

Contingent liabilities are possible obligations that could result from uncertain future events outside of the Bank’s control, or present obligations not recognized because the amount cannot be adequately measured or payment is not probable. Contingent liabilities are not recognized in the financial statements but are disclosed if significant.

BIS shares

The 9,441 shares in the BIS have a nominal value of 5,000 Special Drawing Rights per share, of which 25% (i.e., SDR1,250) is paid up. The balance of SDR3,750 is callable at three months’ notice by a decision of the BIS Board of Directors. The Canadian equivalent of this contingent liability was $67.2 million as at December 31, 2018 ($63.3 million at December 31, 2017) based on prevailing exchange rates.

Guarantees

LVTS guarantee

The LVTS is a large-value payment system, owned and operated by Payments Canada. Any deposit-taking financial institution that is a member of Payments Canada can participate in the LVTS, provided that it maintains a settlement account at the Bank of Canada, has the facilities to pledge collateral for LVTS purposes, and meets certain technical requirements. The system’s risk-control features, which include caps on net debit positions and collateral to secure the use of overdraft credit, are sufficient to permit the system to obtain the necessary liquidity to settle in the event of the failure of the single LVTS participant with the largest possible net amount owing. The Bank guarantees to provide this liquidity, and, in the event of a single-participant failure, the liquidity loan will be fully collateralized.

In the extremely unlikely event that there were defaults by more than one participant during the LVTS operating day in an aggregate amount greater than the largest possible net amount owing by a single participant, there would not likely be enough collateral to secure the amount of liquidity that the Bank would need to provide to settle the system. This may result in the Bank having unsecured claims on the defaulting participants in excess of the amount of collateral pledged to the Bank to cover the liquidity loans. The Bank would have the right, as an unsecured creditor, to recover any amount of its liquidity loan that was unpaid.

Since the guarantee would be called upon only if a series of extremely low-probability events were to occur, the likelihood of the guarantee being executed is remote. Furthermore, the Bank’s maximum exposure under this guarantee is not determinable, as the extent of exposure would be based on the unique circumstances of the failure event. No amount has ever been paid as a result of this guarantee. For that reason, no amount is or has ever been provided for in the liabilities of the Bank.

Other indemnification agreements

In the normal course of operations, the Bank includes indemnification clauses within agreements with various counterparties in transactions such as service agreements, software licences, leases and purchases of goods. Under these agreements, the Bank agrees to indemnify the counterparty against loss or liability arising from acts or omissions of the Bank in relation to the agreement. The nature of the indemnification agreements prevents the Bank from making a reasonable estimate of the maximum potential amount that the Bank would be required to pay. No indemnification amount has ever been paid under such agreements.

Insurance

The Bank does not normally insure against direct risks of loss to the Bank, except for potential liabilities to third parties, and when there is a legal or contractual obligation to carry insurance.

Any costs arising from risks not insured are recognized in the financial statements if, due to a past event, the Bank has a present legal or constructive obligation that can be estimated reliably as at the reporting date, and it is probable that an outflow of economic benefits will be required to settle the obligation.

17. Equity

The Bank manages its capital to ensure compliance with the Bank of Canada Act. There were no other externally imposed capital requirements at the end of the reporting year.

The Bank’s equity is composed of the following elements, as shown below.

As at December 31	2018	2017
Share capital	5.0	5.0
Statutory reserve	25.0	25.0
Special reserve	100.0	100.0
Investment revaluation reserve table 45 note *	395.3	365.6
Retained earnings	-	-
Total equity	525.3	495.6
Table 45 note Table 45 note * The investment revaluation reserve was previously known as the available-for-sale reserve under IAS 39, as discussed in Note 2. Return to table 45 note * referrer

Share capital

The authorized capital of the Bank is $5.0 million divided into 100,000 shares with a par value of $50 each. The shares are fully paid and have been issued to the Minister of Finance, who holds them on behalf of the Government of Canada.

Statutory reserve

The statutory reserve was accumulated out of net income until it reached the stipulated maximum amount of $25.0 million in 1955, consistent with the requirement of section 27 of the Bank of Canada Act.

Special reserve

Following an amendment to section 27.1 of the Bank of Canada Act, the special reserve was created in 2007 to offset potential unrealized valuation losses due to changes in the fair value of the Bank’s investment portfolio. An initial amount of $100 million was established at that time, and the reserve is subject to a ceiling of $400 million.

The amount held in the special reserve is reviewed regularly for appropriateness using value-at-risk analysis and scenario-based stress tests and may be amended, pursuant to a resolution passed by the Board of Directors.

Investment revaluation reserve

The investment revaluation reserve (previously the available-for-sale reserve under IAS 39, as discussed in Note 2) represents the net unrealized fair value gains of each of the Bank’s financial assets classified and measured at FVOCI, as shown below.

As at December 31	2018	2017
Government of Canada treasury bills	n.a.	-
BIS shares	395.3	365.6
Total investment revaluation reserve	395.3	365.6

Retained earnings

The net income of the Bank, less any allocation to reserves, is considered ascertained surplus (surplus) and is transferred to the Receiver General for Canada, consistent with the requirement of section 27 of the Bank of Canada Act. Changes to the surplus payable to the Receiver General for Canada are presented in Note 13.

The Bank’s remittance agreement with the Minister of Finance was designed to enable the Bank to manage its equity requirements with consideration given to the volatility arising from fair value changes and remeasurements, which are recorded in other comprehensive income. This agreement allows the Bank to withhold from its remittance to the Receiver General for Canada any increase in cumulative net unrealized losses on financial assets that are classified and measured at FVOCI, unrealized remeasurements of the net defined-benefit liability/asset on defined-benefit plans, and other unrealized or non-cash losses arising from changes in accounting standards or legislation. Any decrease in previously withheld cumulative net unrealized non-cash losses is added to the remittance.

During 2018, the Bank remitted $91.4 million of previously withheld remittances to the Receiver General for Canada (in 2017, withheld $46.6 million). As at December 31, 2018, $54.9 million in withheld remittances was outstanding ($156.0 million as at December 31, 2017, and $146.3 million as at January 1, 2018, as a result of the transition to IFRS 9 as described in Note 2).

18. Related parties

Persons or entities are considered related parties to the Bank if they are

• under common ownership to the Government of Canada;
• a post-employment benefit plan for the benefit of Bank employees; or
• a member of key management personnel, which include members of the Executive Council, Senior Management Council or the Board of Directors, and their families.

Government of Canada

The Bank is related in terms of common ownership to all Government of Canada departments, agencies and Crown corporations. To achieve its monetary policy objectives, the Bank maintains a position of structural and functional independence from the Government of Canada through its ability to fund its own operations without external assistance, and through its management and governance.

In the normal course of its operations, the Bank enters into transactions with related parties, and significant transactions and balances are presented in these financial statements. Not all transactions between the Bank and government-related entities have been disclosed, as permitted by the partial exemption available to wholly owned government entities in International Accounting Standard 24 Related Party Disclosures (IAS 24).

The Bank provides funds-management, fiscal agent and banking services to the Government of Canada, as mandated by the Bank of Canada Act, and does not recover the costs of these services.

Bank of Canada Pension Plan

The Bank provides management, investment and administrative support to the Pension Plan. Services in the amount of $1.0 million ($0.9 million in 2017) were fully recovered from the Pension Plan in 2018. Disclosures related to the Bank’s post-employment benefit plans are included in Note 14.

Key management personnel and compensation

The key management personnel responsible for planning, directing and controlling the activities of the Bank are the members of the Executive Council, the Senior Management Council and the Board of Directors. The number of key management personnel as at December 31, 2018, was 28 (30 in 2017).

The compensation of key management personnel is presented in the following table. Short-term employee benefits and post-employment benefits apply to Bank employees only.

As at December 31	2018	2017
Short-term employee benefits	5.9	6.6
Post-employment benefits	2.0	1.8
Directors’ fees	0.3	0.3
Total compensation	8.2	8.7

There were no other long-term employee benefit costs or termination benefits related to key management personnel in 2018 ($nil in 2017).

DEPARTMENT OF THE ENVIRONMENT
DEPARTMENT OF HEALTH

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

Publication after screening assessment of three substances — amitrole, CAS RN^{footnote 1} 61-82-5, sodium dichloroisocyanurate (NaDCC), CAS RN 2893-78-9, and hexa(methoxymethyl)melamine, CAS RN 3089-11-0 — specified on the Domestic Substances List (paragraphs 68(b) and (c) or subsection 77(1) of the Canadian Environmental Protection Act, 1999)

Whereas amitrole and sodium dichloroisocyanurate (NaDCC) are substances identified under subsection 73(1) of the Canadian Environmental Protection Act, 1999;

Whereas a summary of the draft screening assessment conducted on hexa(methoxymethyl)melamine pursuant to paragraphs 68(b) and (c) of the Act and on amitrole and NaDCC pursuant to section 74 of the Act is annexed hereby;

And whereas it is proposed to conclude that the substances do not meet any of the criteria set out in section 64 of the Act,

Notice therefore is hereby given that the Minister of the Environment and the Minister of Health (the ministers) propose to take no further action at this time under section 77 of the Act for the two substances identified under subsection 73(1) of the Act.

Notice is further given that the ministers propose to take no further action on hexa(methoxymethyl)melamine at this time.

Notice is further given that options are being considered for follow-up activities to track changes in human exposure to amitrole and hexa(methoxymethyl)melamine.

Public comment period

Any person may, within 60 days after publication of this notice, file with the Minister of the Environment written comments on the measure the ministers propose to take and on the scientific considerations on the basis of which the measure is proposed. More information regarding the scientific considerations may be obtained from the Canada.ca (Chemical Substances) website. All comments must cite the Canada Gazette, Part I, and the date of publication of this notice and be sent to the Executive Director, Program Development and Engagement Division, Department of the Environment, Gatineau, Quebec K1A 0H3, by fax to 819‑938‑5212, or by email to eccc.substances.eccc@canada.ca. Comments can also be submitted to the Minister of the Environment using the online reporting system available through Environment and Climate Change Canada’s Single Window.

In accordance with section 313 of the Canadian Environmental Protection Act, 1999, any person who provides information in response to this notice may submit with the information a request that it be treated as confidential.

Jacqueline Gonçalves
Director General
Science and Risk Assessment Directorate

On behalf of the Minister of the Environment

David Morin
Director General
Safe Environments Directorate

On behalf of the Minister of Health

ANNEX

Summary of the draft screening assessment of the Triazines and Triazole Group

Pursuant to section 68 or 74 of the Canadian Environmental Protection Act, 1999 (CEPA), the Minister of the Environment and the Minister of Health have conducted a screening assessment of three of six substances, which were originally referred to under the Chemicals Management Plan as the Triazoles Group and the Cyanurates Group. The two groups have since been merged and are referred to collectively as the Triazines and Triazole Group. These substances were identified as priorities for assessment, as they met categorization criteria under subsection 73(1) of CEPA or were considered a priority on the basis of other human health concerns. Two of the six substances were determined to be of low concern through another approach, and the proposed decisions for these substances are provided in a separate report. ^{footnote 2} The other substance will be assessed individually in a future screening assessment. ^{footnote 3} The three substances addressed in this screening assessment will hereinafter be referred to as the Triazines and Triazole Group.

Substances in the Triazines and Triazole Group

CAS RN	Domestic Substances List Name	Common Name
61-82-5	1H-1,2,4-triazol-3-amine	Amitrole
2893-78-9	1,3,5-triazine-2,4,6(1H,3H,5H)-trione, 1,3-dichloro-, sodium salt	Sodium dichloroisocyanurate (NaDCC)
3089-11-0table 11 note a	1,3,5-triazine-2,4,6-triamine, N,N,N′,N′,N″,N″-hexakis(methoxymethyl)-	Hexa(methoxymethyl)melamine
Table 11 Note Table 1 Note a This substance was not identified under subsection 73(1) of CEPA, but was included in this assessment because it was considered a priority on the basis of other human health concerns. Return to table 11 note a referrer

None of the substances in the Triazines and Triazole Group have been identified as naturally occurring. According to information submitted pursuant to surveys under CEPA section 71 and via targeted stakeholder follow-up, amitrole, NaDCC, and hexa(methoxymethyl)melamine were not reported to be manufactured above the reporting threshold in reporting year 2008 or 2011. These three substances were reported to be imported into Canada in total annual quantities ranging from <100 to 1 000 000 kg, in reporting year 2008 or 2011. In Canada, amitrole was not reported to be present in any products with commercial or consumer use above the reporting threshold. In Canada, amitrole is registered as a herbicide. In 2014, the Pest Management Regulatory Agency (PMRA) conducted a re-evaluation of amitrole, and as a result, the agency implemented a phase-out of its use as a herbicide, with the exception of its use on spruce bareroot nursery stock (seedbeds). In April 2018, the PMRA initiated a special review of amitrole following the non-renewal (no longer approved) of pesticidal uses in the European Union. NaDCC has uses in multiple pest control products (e.g. algicides, bactericides, slimicides, and a sanitizer). In addition, NaDCC can be used in a variety of other products, including water treatment products, cleaning products, and disinfectants. Hexa(methoxymethyl)melamine may be used as a cross-linking agent, which can be used in food packaging materials and other commercial applications.

The ecological risks of the substances in the Triazines and Triazole Group were characterized using the ecological risk classification of organic substances approach (ERC), which is a risk-based approach that employs multiple metrics for both hazard and exposure, with weighted consideration of multiple lines of evidence for determining risk classification. Hazard profiles are based principally on metrics regarding mode of toxic action, chemical reactivity, food web–derived internal toxicity thresholds, bioavailability, and chemical and biological activity. Metrics considered in the exposure profiles include the potential emission rate, overall persistence, and long-range transport potential. A risk matrix is used to assign a low, moderate or high level of potential concern for substances on the basis of their hazard and exposure profiles. Based on the outcome of the ERC analysis, the three substances in the Triazines and Triazole Group are considered unlikely to cause ecological harm.

Considering all available lines of evidence presented in this screening assessment, there is a low risk of harm to the environment from amitrole, NaDCC, and hexa(methoxymethyl)melamine. It is proposed to conclude that amitrole, NaDCC, and hexa(methoxymethyl)melamine do not meet the criteria under paragraph 64(a) or (b) of CEPA, as they are not entering the environment in a quantity or concentration or under conditions that have or may have an immediate or long-term harmful effect on the environment or its biological diversity, or that constitute or may constitute a danger to the environment on which life depends.

From a human health perspective, the health effects of concern about amitrole include reproductive toxicity and carcinogenicity. There were limited substance-specific health effects data available about NaDCC. A structurally similar chemical substance, sodium cyanurate/cyanuric acid, was used as an analogue for read-across purposes. NaDCC and sodium cyanurate/cyanuric acid were reviewed internationally through the Joint Food and Agriculture Organization (FAO)/World Health Organization (WHO) Expert Committee on Food Additives (JECFA). The JECFA identified health effects of concern for sodium cyanurate, including effects on the urinary tract and heart in laboratory studies, which were considered the critical effects for NaDCC.

There were limited substance-specific health effects data for hexa(methoxymethyl)melamine. A structurally similar chemical substance, melamine, was used as an analogue for read-across purposes. In laboratory studies with melamine, effects on the bladder and urinary system were considered the critical effects in this assessment, and there is also potential carcinogenicity.

Given the lack of consumer uses of amitrole in Canada, the potential risk to human health is considered to be low. The margins of exposure between levels of exposure of the Canadian general population from non-pesticidal use of NaDCC in water treatment tablets and cleaning products and critical effect levels were considered adequate to address uncertainties in the health effects and exposure databases. Similarly, for hexa(methoxymethyl)melamine, margins between levels of exposure of the general population from its theoretical presence in drinking water and critical effect levels were considered adequate to address uncertainties in the health effects and exposure databases.

On the basis of the information presented in this draft screening assessment, it is proposed to conclude that amitrole, NaDCC, and hexa(methoxymethyl)melamine do not meet the criteria under paragraph 64(c) of CEPA, as they are not entering the environment in a quantity or concentration or under conditions that constitute or may constitute a danger in Canada to human life or health.

Proposed conclusion

It is proposed to conclude that amitrole, NaDCC, and hexa(methoxymethyl)melamine do not meet any of the criteria set out in section 64 of CEPA.

Consideration for follow-up

While exposure of the general population to amitrole and hexa(methoxymethyl)melamine is not of concern at current levels, these substances are associated with human health effects of concern. Therefore, there may be concern for human health if exposure were to increase. Follow-up activities to track changes in exposure or commercial use patterns are under consideration.

Stakeholders are encouraged to provide, during the 60-day public comment period on the draft screening assessment, any information pertaining to these substances that may help inform the choice of follow-up activity. This could include information on new or planned import, manufacture or use of these substances, if the information has not previously been submitted to the ministers.

The draft screening assessment for these substances is available on the Canada.ca (Chemical Substances) website.

DEPARTMENT OF THE ENVIRONMENT
DEPARTMENT OF HEALTH

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

Publication after screening assessment of 21 substances specified on the Domestic Substances List (paragraphs 68(b) and (c) or subsection 77(1) of the Canadian Environmental Protection Act, 1999)

Whereas 20 of the 21 substances identified in Annex II below are substances identified under subsection 73(1) of the Canadian Environmental Protection Act, 1999;

Whereas a summary of the draft screening assessment conducted on molybdenum oxide (MoO₃) pursuant to paragraphs 68(b) and (c) of the Act and on 20 substances pursuant to section 74 of the Act is annexed hereby;

And whereas it is proposed to conclude that the substances do not meet any of the criteria set out in section 64 of the Act,

Notice therefore is hereby given that the Minister of the Environment and the Minister of Health (the ministers) propose to take no further action at this time under section 77 of the Act for the 20 substances identified under subsection 73(1) of the Act.

Notice is further given that the ministers propose to take no further action on MoO₃ at this time.

Notice is further given that options are being considered for follow-up activities to track changes in exposure to silicon carbide (SiC), MoO₃, and beryllium.

Public comment period

Any person may, within 60 days after publication of this notice, file with the Minister of the Environment written comments on the measure the ministers propose to take and on the scientific considerations on the basis of which the measure is proposed. More information regarding the scientific considerations may be obtained from the Canada.ca (Chemical Substances) website. All comments must cite the Canada Gazette, Part I, and the date of publication of this notice and be sent to the Executive Director, Program Development and Engagement Division, Department of the Environment, Gatineau, Quebec K1A 0H3, by fax to 819‑938‑5212, or by email to eccc.substances.eccc@canada.ca. Comments can also be submitted to the Minister of the Environment using the online reporting system available through Environment and Climate Change Canada’s Single Window.

In accordance with section 313 of the Canadian Environmental Protection Act, 1999, any person who provides information in response to this notice may submit with the information a request that it be treated as confidential.

Jacqueline Gonçalves
Director General
Science and Risk Assessment Directorate

On behalf of the Minister of the Environment

David Morin
Director General
Safe Environments Directorate

On behalf of the Minister of Health

ANNEX I

Summary of the draft screening assessment of substances identified as being of low concern using the ecological risk classification of inorganic substances and three human health science approaches

Pursuant to sections 68 and 74 of the Canadian Environmental Protection Act, 1999 (CEPA), the Minister of the Environment and the Minister of Health (the ministers) have conducted a screening assessment of 21 substances. These substances were identified as priorities for assessment, as they met categorization criteria under subsection 73(1) of CEPA or were considered a priority on the basis of other human health concerns. The Chemical Abstracts Service Registry Numbers (CAS RNs) ^{footnote 4} and the Domestic Substances List (DSL) names of these substances are listed in Annex II below.

The 21 substances in this assessment were evaluated for ecological risk and human health risk using four different science approaches (i.e. one ecological and three human health approaches). This draft screening assessment proposes conclusions for those substances that were identified as having a low likelihood of causing harm to human health and the environment based on these streamlined approaches.

The ecological risks of the substances in this assessment were characterized using the ecological risk classification of inorganic substances (ERC-I). The ERC-I is a risk-based approach that employs multiple metrics considering both hazard and exposure in a weight of evidence. Hazard characterization in ERC-I included a survey of past predicted no-effect concentrations (PNECs) and water quality guidelines, and the derivation of new PNEC values when required. Exposure profiling considered two approaches: predictive modelling using a generic near-field exposure model for each substance, and an analysis of measured concentrations collected by federal and provincial water quality monitoring programs using these concentrations as a conservative indicator of exposure for individual substances. Modelled and measured predicted environmental concentrations (PECs) were compared to PNECs, and multiple statistical metrics were computed and compared to decision criteria to classify the potential to cause harm to the environment. The ERC-I identified the 21 substances in this assessment as being of low ecological concern.

The human health risks of the substances in this assessment were characterized using one of three science approaches: biomonitoring-based approach 1, biomonitoring-based approach 2, and the low human health hazard potential approach. The biomonitoring-based approach 1 is a qualitative science approach used to identify substances with limited exposure based on substances or moieties measured in the Canadian population at very low frequencies. The biomonitoring-based approach 2 compares human biomonitoring data (exposure) against biomonitoring guidance values (health effects), such as biomonitoring equivalents (BEs), to identify substances with low concern for human health. The low human health hazard potential approach is used to identify substances with low inherent repeat-dose toxicity.

When the results of the ERC-I and the three human health science approaches are considered together, a subset of those 21 substances is identified as being of low concern to human health and the environment. Conclusions on the remaining substances (i.e. those identified as being either of low concern to the environment through the ERC-I or of low concern to human health through one of the three streamlined human health–based approaches, but not both) will be made in other assessments.

Considering all available lines of evidence presented in this draft screening assessment, there is a low risk of harm to the environment from the 21 substances in this assessment. It is proposed to conclude that these substances do not meet the criteria under paragraph 64(a) or (b) of CEPA, as they are not entering the environment in a quantity or concentration or under conditions that have or may have an immediate or long-term harmful effect on the environment or its biological diversity or that constitute or may constitute a danger to the environment on which life depends.

On the basis of the information presented in this draft screening assessment, it is proposed to conclude that the 21 substances in this assessment do not meet the criteria under paragraph 64(c) of CEPA, as they are not entering the environment in a quantity or concentration or under conditions that constitute or may constitute a danger in Canada to human life or health.

Proposed conclusion

It is proposed to conclude that the 21 substances listed in Annex II do not meet any of the criteria set out in section 64 of CEPA.

Consideration for follow-up

While exposure of the general population to SiC, MoO₃, and beryllium is not of concern at current levels, these substances are associated with human health effects of concern. Therefore, there may be concern for human health if exposure were to increase. Follow-up activities to track changes in exposure or commercial use patterns are under consideration.

Stakeholders are encouraged to provide, during the 60-day public comment period on the draft screening assessment, any information pertaining to these substances that may help inform the choice of follow-up activity. This could include information on new or planned import, manufacture or use of this substance, if the information has not previously been submitted to the ministers.

The draft screening assessment for these substances is available on the Canada.ca (Chemical Substances) website.

ANNEX II

Substances assessed using the ecological risk classification of inorganic substances and one of three human health science approaches

CAS RN	DSL name
409-21-2	Silicon carbide (SiC)
513-77-9	Carbonic acid, barium salt (1:1)
1313-27-5table 12 note a	Molybdenum oxide (MoO3)
1317-33-5	Molybdenum sulfide (MoS2)
1345-24-0	C.I. Pigment Red 109
7440-31-5	Tin
7440-41-7	Beryllium
7553-56-2	Iodine
7681-11-0	Potassium iodide (KI)
7681-82-5	Sodium iodide (NaI)
7722-84-1	Hydrogen peroxide (H2O2)
7727-18-6	Vanadium, trichlorooxo-
7727-43-7	Sulfuric acid, barium salt (1:1)
7789-20-0	Water-d2
10361-37-2	Barium chloride (BaCl2)
11099-11-9	Vanadium oxide
12713-03-0table 12 note b	Umber
17194-00-2	Barium hydroxide (Ba(OH)2)
20461-54-5	Iodide
51274-00-1	C.I. Pigment Yellow 42
63325-16-6	Mercury, diiodobis(5-iodo-2-pyridinamine)-, dihydriodide
Table 12 Notes Table 12 Note a This substance was not identified under subsection 73(1) of CEPA but was included in this assessment as it was considered a priority on the basis of human health concerns. Return to table 12 note a referrer Table 12 Note b The substance bearing this CAS RN is a UVCB (substance of unknown or variable composition, a complex reaction product, or biological material). Return to table 12 note b referrer

DEPARTMENT OF HEALTH

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

Final guideline for Canadian drinking water quality for enteric protozoa: Giardia and Cryptosporidium

Pursuant to subsection 55(3) of the Canadian Environmental Protection Act, 1999, the Minister of Health hereby gives notice of a final guideline for Canadian drinking water quality for enteric protozoa: Giardia and Cryptosporidium. The technical document for this guideline is available on the Water Quality website. This document underwent a public consultation period of 60 days in 2017 and was updated to take into consideration the comments received.

April 3, 2019

David Morin
Director General
Safe Environments Directorate

On behalf of the Minister of Health

ANNEX

Guideline

Where treatment is required for enteric protozoa, the guideline for Giardia and Cryptosporidium in drinking water is a health-based treatment goal of a minimum 3-log removal and/or inactivation of cysts and oocysts. Depending on the source water quality, a greater log removal and/or inactivation may be required. Treatment technologies and source water protection measures known to reduce the risk of waterborne illness should be implemented and maintained if source water is subject to faecal contamination or if Giardia or Cryptosporidium has been responsible for past waterborne outbreaks.

Executive summary

Protozoa are a diverse group of micro-organisms. Most are free-living organisms that can reside in fresh water and pose no risk to human health. Some enteric protozoa are pathogenic and have been associated with drinking water-related outbreaks. The main protozoa of concern in Canada are Giardia and Cryptosporidium. They may be found in water following direct or indirect contamination by the faeces of humans or other animals. Person-to-person transmission is a major route of exposure for both Giardia and Cryptosporidium.

Health Canada recently completed its review of the health risks associated with enteric protozoa in drinking water. This guideline technical document reviews and assesses identified health risks associated with enteric protozoa in drinking water. It evaluates new studies and approaches and takes into consideration the methodological limitations for the detection of protozoa in drinking water. Based on this review, the drinking water guideline is a health-based treatment goal of a minimum 3-log reduction of enteric protozoa.

Health effects

The health effects associated with exposure to Giardia and Cryptosporidium cysts and oocysts, like those of other pathogens, depend upon features of the host, pathogen and environment. The immune status of the host, virulence of the strain, infectivity and viability of the cyst or oocyst, and the degree of exposure are all key determinants of infection and illness. Infection with Giardia or Cryptosporidium can result in acute and chronic health effects.

Theoretically, a single cyst of Giardia would be sufficient to cause infection. However, studies have only demonstrated infection being caused by more than a single cyst, and the number of cysts needed is dependent on the virulence of the particular strain. Typically, Giardia is non-invasive and results in asymptomatic infections. Symptomatic giardiasis can result in nausea, diarrhea (usually sudden and explosive), anorexia, an uneasiness in the upper intestine, malaise and occasionally low-grade fever or chills. The acute phase of the infection commonly resolves spontaneously, and organisms generally disappear from the faeces. Some patients (e.g. children) suffer recurring bouts of the disease, which may persist for months or years.

As is the case for Giardia and other pathogens, a single organism of Cryptosporidium can potentially cause infection, although studies have only demonstrated infection being caused by more than one organism. Individuals infected with Cryptosporidium are more likely to develop a symptomatic illness than those infected with Giardia. Symptoms include watery diarrhea, cramping, nausea, vomiting (particularly in children), low-grade fever, anorexia and dehydration. The duration of infection depends on the condition of the immune system. Immunocompetent individuals usually carry the infection for a maximum of 30 days. In immunocompromised individuals, infection can be life-threatening and can persist throughout the immunosuppression period.

Exposure

Giardia cysts and Cryptosporidium oocysts can survive in the environment for extended periods of time, depending on the characteristics of the water. They have been shown to withstand a variety of environmental stresses, including freezing and exposure to seawater. Cysts and oocysts are commonly found in Canadian surface waters. The sudden and rapid influx of these micro-organisms into surface waters, for which available treatment may not be adequate, is likely responsible for the increased risk of exposure through drinking water. Cysts and oocysts have also been detected at low concentrations in groundwater supplies; contamination is usually as a result of the proximity of the well to contamination sources, including inadequate filtration in some geological formations, as well as improper design and/or maintenance of the well.

Giardia and Cryptosporidium are common causes of waterborne disease outbreaks and have been linked to both inadequately treated surface water and untreated well water. Giardia is the most commonly reported intestinal protozoan in Canada, North America and the world.

Analysis and treatment

A risk management approach, such as the source-to-tap approach or a water safety plan approach, is the best method to reduce enteric protozoa and other waterborne pathogens in drinking water. This type of approach requires a system assessment to characterize the source water, describe the treatment barriers that are in place, identify the conditions that can result in contamination, and implement the control measures needed to mitigate risks. One aspect of source water characterization is routine and targeted monitoring for Giardia and Cryptosporidium. Monitoring of source water for protozoa can be targeted by using information about sources of faecal contamination, together with historical data on rainfall, snowmelt, river flow and turbidity, to help identify the conditions that are likely to lead to peak concentrations of cysts and oocysts. A validated method that allows for the simultaneous detection of these protozoa is available. Where monitoring for Giardia and Cryptosporidium is not feasible (e.g. small community water supplies), identifying the conditions that can result in contamination can provide guidance on necessary risk management measures to implement (e.g. source water protection, adequate treatment, operational monitoring, standard operating procedures and contingency plans).

Once the source has been characterized, pathogen reduction targets should be established and effective treatment barriers should be in place to achieve safe levels in the treated drinking water. In general, all water supplies derived from surface water sources or groundwater under the direct influence of surface waters (GUDI) should include adequate filtration (or equivalent technologies) and disinfection. The combination of physical removal (e.g. filtration) and inactivation barriers (e.g. ultraviolet light disinfection) is the most effective way to reduce protozoa in drinking water, because of their resistance to commonly used chlorine-based disinfectants.

The absence of indicator bacteria (e.g. Escherichia coli, total coliforms) does not necessarily indicate the absence of enteric protozoa. The application and control of a source-to-tap approach, including process and compliance monitoring (e.g. turbidity, disinfection conditions, E. coli), is important to verify that the water has been adequately treated and is therefore of an acceptable microbiological quality. In the case of untreated groundwater, testing for indicator bacteria is useful in assessing the potential for faecal contamination, which may include enteric protozoa.

Quantitative microbial risk assessment

Quantitative microbial risk assessment (QMRA) is a tool that uses source water quality data, treatment barrier information and pathogen-specific characteristics to estimate the burden of disease associated with exposure to pathogenic microorganisms in drinking water. QMRA is generally used for two purposes. It can be used to set pathogen reduction targets during the development of drinking water quality guidelines, such as is done in this document. It can also be used to prioritize risks on a site-specific basis as part of a source-to-tap or water safety plan approach.

Specific enteric protozoa whose characteristics make them a good representative of all similar pathogenic protozoa are reference protozoan pathogens. It is assumed that controlling the reference protozoan would ensure control of all other similar protozoa of concern. Giardia lamblia and Cryptosporidium parvum have been selected as the reference protozoa for this risk assessment because of their high prevalence rates, potential to cause widespread disease, resistance to chlorine disinfection and the availability of dose-response models.

International considerations

Drinking water quality guidelines, standards and/or guidance from other foreign governments or international organizations may vary due to the age of the assessments as well as differing policies and approaches.

Various organizations have established guidelines or standards for enteric protozoa in drinking water. The U.S. Environmental Protection Agency generally requires drinking water systems to achieve a 3-log removal or inactivation of Giardia, and a minimum 2-log removal or inactivation of Cryptosporidium. More treatment may be required for Cryptosporidium depending on the results of Cryptosporidium monitoring in the water source. The World Health Organization recommends providing QMRA-based performance targets as requirements for the reduction of enteric protozoa. Neither the European Union nor the Australian National Health and Medical Research Council has established a guideline value or standard for enteric protozoa in drinking water.

DEPARTMENT OF HEALTH

CANADIAN ENVIRONMENTAL PROTECTION ACT, 1999

Final guideline for Canadian drinking water quality for enteric viruses

Pursuant to subsection 55(3) of the Canadian Environmental Protection Act, 1999, the Minister of Health hereby gives notice of a final guideline for Canadian drinking water quality for enteric viruses. The technical document for this guideline is available on the Water Quality website. This document underwent a public consultation period of 60 days in 2017 and was updated to take into consideration the comments received.

April 3, 2019

David Morin
Director General
Safe Environments Directorate

On behalf of the Minister of Health

ANNEX

Guideline

The guideline for enteric viruses in drinking water is a health-based treatment goal of a minimum 4-log removal and/or inactivation of enteric viruses. Depending on the source water quality, a greater log reduction may be required. Methods currently available for the detection of enteric viruses are not feasible for routine monitoring. Treatment technologies and source water protection measures known to reduce the risk of waterborne illness should be implemented and maintained if source water is subject to faecal contamination or if enteric viruses have been responsible for past waterborne outbreaks.

Executive summary

Viruses are extremely small micro-organisms that are incapable of replicating outside a host cell. In general, viruses are host specific, which means that viruses that infect animals or plants do not usually infect humans, although a small number of enteric viruses have been detected in both humans and animals. Most viruses also infect only certain types of cells within a host; consequently, the health effects associated with a viral infection vary widely. Viruses that can multiply in the gastrointestinal tract of humans or animals are known as “enteric viruses.” There are more than 140 enteric virus serotypes known to infect humans.

Health Canada recently completed its review of the health risks associated with enteric viruses in drinking water. This guideline technical document reviews and assesses identified health risks associated with enteric viruses in drinking water. It evaluates new studies and approaches and takes into consideration the methodological and interpretation limitations in available methods for the detection of viruses in drinking water. Based on this review, the drinking water guideline is a health-based treatment goal of a minimum 4-log (i.e. 99.99%) removal and/or inactivation of enteric viruses.

Health effects

The human illnesses associated with enteric viruses are diverse. The main health effect associated with enteric viruses is gastrointestinal illness. Enteric viruses can also cause serious acute illnesses, such as meningitis, poliomyelitis and non-specific febrile illnesses. They have also been implicated in chronic diseases, such as diabetes mellitus and chronic fatigue syndrome.

The incubation time and severity of health effects are dependent on the specific virus responsible for the infection. The seriousness of the health effects from a viral infection will also depend on the characteristics of the individual affected (e.g. age, health status). In theory, a single infectious virus particle can cause infection; however, infection is based on the ability of that virus particle to reproduce within host cells. For many enteric viruses, the number of infectious virus particles needed to cause an infection is low, or presumed to be low.

Exposure

Enteric viruses cannot multiply in the environment; however, they can survive for extended periods of time (e.g. two to three years in groundwater) and are more infectious than most other micro-organisms. Enteric viruses are excreted in the faeces of infected humans and animals, and some enteric viruses can also be excreted in urine. Source waters can become contaminated by human faeces through a variety of routes, including effluents from wastewater treatment plants, leaking sanitary sewers, discharges from sewage lagoons, and septic systems. Viruses may also enter the distribution system during water main construction, when regular operations and maintenance activities create pressure fluctuations or via flooded underground components.

Enteric viruses have been detected in surface water and groundwater sources. They appear to be highly prevalent in surface waters, and their occurrence will vary with time and location. In the case of groundwater, viruses have been detected in both confined and unconfined aquifers, and can be transported significant distances (i.e. hundreds of metres) in short time frames (i.e. in the order of hours to days). Confined aquifers have an overlying low-permeability layer that may act as a barrier to virus transport. However, these aquifers may still be vulnerable to viral contamination due to pathways, such as fractures, root holes or other discontinuities that allow viruses to be transported through the confining layer into the aquifer below. The occurrence of enteric viruses in groundwater is not generally continuous and can vary greatly over time. Consuming untreated or inadequately treated faecally contaminated groundwater has been linked to illness.

Analysis and treatment

A risk management approach, such as the source-to-tap approach or a water safety plan, is the best method to reduce enteric viruses and other waterborne pathogens in drinking water. This type of approach requires a system assessment to characterize the source water; describe the treatment barriers that are in place; identify the conditions that can result in contamination; and implement the control measures needed to mitigate risks. Identifying the vulnerability of a source to faecal contamination, particularly from humans (e.g. septic systems, leaking sanitary sewers), is an important part of a system assessment because routine monitoring of drinking water for enteric viruses is not practical at this time. Collecting and analyzing source water samples for enteric viruses is, however, important for water utilities that wish to conduct a quantitative microbial risk assessment. Validated cell culture and molecular methods are available for detection of enteric viruses.

Once the source has been characterized, pathogen removal and/or inactivation targets should be established and effective treatment barriers should be in place to reduce the level of enteric viruses in treated drinking water. There are a variety of technologies available to effectively reduce enteric viruses in drinking water; in most cases, primary disinfection will be the key process for virus inactivation. In general, all water supplies derived from surface water sources or groundwater under the direct influence of surface water (GUDI) should include adequate filtration (or equivalent technologies) and disinfection to meet treatment goals for enteric viruses and protozoa. Subsurface sources determined to be vulnerable to viruses should achieve a minimum 4-log removal and/or inactivation of viruses.

The absence of indicator bacteria (e.g. E. coli, total coliforms) does not necessarily indicate the absence of enteric viruses. The application and control of a source-to-tap approach, including process and compliance monitoring (e.g. turbidity, disinfection process, E. coli) is important to verify that the water has been adequately treated and is therefore of an acceptable microbiological quality. In the case of untreated groundwater, testing for indicator bacteria is useful, but not necessarily sufficient, in assessing the potential for faecal contamination, which may include enteric viruses. The results of bacteriological testing should be considered in conjunction with a site-specific vulnerability assessment.

Quantitative microbial risk assessment

Quantitative microbial risk assessment (QMRA) is a tool that uses source water quality data, treatment barrier information and pathogen-specific characteristics to estimate the burden of disease associated with exposure to pathogenic micro-organisms in drinking water. QMRA is generally used for two purposes. It can be used to set pathogen reduction targets during the development of drinking water quality guidelines, such as is done in this document. QMRA can also be used to prioritize risks on a site-specific basis as part of a source-to-tap or water safety plan approach.

Specific enteric viruses whose characteristics make them a good representative of all similar pathogenic viruses are considered in QMRA, and from these, a reference virus is selected. It is assumed that controlling the reference virus would ensure control of all other similar viruses of concern. Numerous enteric viruses have been considered. As no single virus has all the characteristics of an ideal reference virus, this risk assessment uses characteristics from several different viruses.

International considerations

Drinking water quality guidelines, standards and/or guidance from other foreign governments or international organizations may vary due to the age of the assessments as well as differing policies and approaches.

Various organizations have established guidelines and/or guidance for enteric viruses in drinking water. The United States Environmental Protection Agency generally requires drinking water systems to achieve a 4-log removal and/or inactivation of enteric viruses. The World Health Organization recommends providing control measures (e.g. preventing source water contamination, adequate treatment) within a water safety plan, in order to reduce potential risks from enteric viruses. Neither the European Union nor Australia’s National Health and Medical Research Council has established a guideline value or standard for enteric viruses in drinking water.

DEPARTMENT OF INDUSTRY

OFFICE OF THE REGISTRAR GENERAL

Appointment

Name and position

Instrument of Advice dated March 18, 2019

Murray, Joyce

President of the Treasury Board, to be styled President of the Treasury Board and Minister of Digital Government

April 5, 2019

Diane Bélanger
Official Documents Registrar

DEPARTMENT OF INDUSTRY

OFFICE OF THE REGISTRAR GENERAL

Appointments

Name and position	Order in Council
Cohen, Gregory Evan	2019-203
Immigration and Refugee Board of Canada
Full-time member
Federal Court of Appeal or Federal Court	2019-244
Commissioners to administer oaths
Bilodeau-Richard, Marc
McDonald, Jessie
Pelletier, Stéphanie
Ruhlmann, Annie
Turcotte, Jessica
Garneau, Cynthia	2019-254
VIA Rail Canada Inc.
President and Chief Executive Officer
Keith, John A., Q.C.	2019-210
Supreme Court of Nova Scotia
Judge
Nova Scotia Court of Appeal
Judge ex officio
Parole Board of Canada
Full-time members
Cantin, Francine	2019-186
Gauci, Maureen Victoria	2019-190
Gowanlock, Kathleen Ann	2019-189
Part-time members
Chamberlain, Luc	2019-187
Dhanani, Ashifa	2019-194
Lloyd, Pilsu-qua	2019-192
Scott, Alison Mary	2019-191
Sharma, Parnesh	2019-195
Silbernagel, Harvey A.	2019-193
Veilleux, Brigitte	2019-188
Shugart, Ian
Clerk of the Privy Council and Secretary to the Cabinet	2019-259
and
Government of Canada	2019-260
Commissioner to administer oaths
Spivak, The Hon. Lori T.	2019-211
Court of Appeal for Manitoba
Judge of Appeal d’appel
Superior Court of Justice of Ontario
Judges
Court of Appeal for Ontario
Judges ex officio
Leibovich, Howard	2019-209
Smith, Clyde	2019-208
Supreme Court of Newfoundland and Labrador
Judges
Court of Appeal of Newfoundland and Labrador
Judges ex officio
Coady, Michelle A.	2019-212
O’Brien, Katherine	2019-213
Tax Court of Canada	2019-245
Commissioners to administer oaths
Dawood, Ayesha
Hurmal, Nadine
Meunier, Zoë
Tokes, Ildiko
Turcotte, Jessica
Wilson, Gina	2019-261
Deputy Minister of Public Safety and Emergency Preparedness, to be styled Deputy Minister of Public Safety

April 5, 2019

Diane Bélanger
Official Documents Registrar

DEPARTMENT OF TRANSPORT

MARINE LIABILITY ACT

Ship-source Oil Pollution Fund

Pursuant to section 113 ^{footnote *} of the Marine Liability Act (the Act) and the Marine Liability and Information Return Regulations made pursuant to paragraph 113(3)(b)^{footnote *} of the Act, the amount of the levy in respect of payments into the Ship-source Oil Pollution Fund required by subsection 114.1(2)^{footnote *} of the Act would be 53.58 cents if the levy were to be imposed or reimposed pursuant to subsection 114(1)^{footnote *} of the Act during the fiscal year commencing April 1, 2019.

Marc Garneau, P.C., M.P.
Minister of Transport

INNOVATION, SCIENCE AND ECONOMIC DEVELOPMENT CANADA

RADIOCOMMUNICATION ACT

Notice No. SMSE-002-19 — Release of RSS-246, issue 1; RSS-HAC, issue 1; RSS-Gen, issue 5, amendment 1

Notice is hereby given that Innovation, Science and Economic Development Canada (ISED) has published the following standards:

• Radio Standards Specification RSS-246, issue 1, Ultra-Low Power (ULP) Wireless Medical Capsule Endoscopy Devices Operating in the 430-440 MHz Band, which establishes the certification requirements for licence-exempt ultra-low power wireless medical capsule endoscopy devices operating in the 430-440 MHz frequency band.
• Radio Standards Specification RSS-HAC (Hearing Aid Compatibility), issue 1, Hearing Aid Compatibility and Volume Control, which sets out the compliance requirements for hearing aid compatibility and volume control features for specific radio apparatus.
• Radio Standards Specification RSS-Gen, issue 5, amendment 1, General Requirements for Compliance of Radio Apparatus, which sets out general and certification requirements for licensed and licence-exempt radio apparatus used for radiocommunication other than broadcasting.

These documents will come into force upon their publication on the Official publications section of the Spectrum Management and Telecommunications website.

General information

The Radio equipment standards list will be amended accordingly.

Submitting comments

Comments and suggestions for improving these standards may be submitted online using the Standard Change Request form.

Obtaining copies

Copies of this notice and of documents referred to herein are available electronically on the Spectrum Management and Telecommunications website.

Official versions of notices can be viewed on the Canada Gazette website.

March 28, 2019

Martin Proulx
Director General
Engineering, Planning and Standards Branch

PRIVY COUNCIL OFFICE

Appointment opportunities

We know that our country is stronger — and our government more effective — when decision-makers reflect Canada’s diversity. The Government of Canada has implemented an appointment process that is transparent and merit-based, strives for gender parity, and ensures that Indigenous peoples and minority groups are properly represented in positions of leadership. We continue to search for Canadians who reflect the values that we all embrace: inclusion, honesty, fiscal prudence, and generosity of spirit. Together, we will build a government as diverse as Canada.

We are equally committed to providing a healthy workplace that supports one’s dignity, self-esteem and the ability to work to one’s full potential. With this in mind, all appointees will be expected to take steps to promote and maintain a healthy, respectful and harassment-free work environment.

The Government of Canada is currently seeking applications from diverse and talented Canadians from across the country who are interested in the following positions.

Current opportunities

The following opportunities for appointments to Governor in Council positions are currently open for applications. Every opportunity is open for a minimum of two weeks from the date of posting on the Governor in Council Appointments website.

Position	Organization	Closing date
Chief Administrator	Administrative Tribunals Support Service of Canada
Chairperson	Asia-Pacific Foundation of Canada
Chairperson and Director	Atomic Energy of Canada Limited
Chairperson	Canada Foundation for Sustainable Development Technology
Chairperson and Vice-Chairperson	Canada Industrial Relations Board
Chairperson	Canada Lands Company Limited
President and Chief Executive Officer	Canada Lands Company Limited
Chairperson (joint federal Governor in Council and provincial Lieutenant Governor appointment)	Canada–Newfoundland and Labrador Offshore Petroleum Board
Chairperson	Canada Science and Technology Museum
Vice-Chairperson	Canada Science and Technology Museum
Board Member (Anticipatory)	Canadian Accessibility Standards Development Organization
Chairperson (Anticipatory)	Canadian Accessibility Standards Development Organization
Chief Executive Officer (Anticipatory)	Canadian Accessibility Standards Development Organization
Vice-Chairperson (Anticipatory)	Canadian Accessibility Standards Development Organization
President and Chief Executive Officer	Canadian Commercial Corporation
Chairperson	Canadian Dairy Commission
Chairperson, Vice-Chairperson and Director	Canadian Energy Regulator
Chief Executive Officer	Canadian Energy Regulator
Lead Commissioner, Deputy Lead Commissioner and Commissioner	Canadian Energy Regulator
Pay Equity Commissioner	Canadian Human Rights Commission
Chairperson	Canadian Institutes of Health Research
Permanent Member	Canadian Nuclear Safety Commission
Regional Member (Quebec)	Canadian Radio-television and Telecommunications Commission
Chairperson and Member	Canadian Statistics Advisory Council
President (Chief Executive Officer)	Canadian Tourism Commission
President and Chief Executive Officer	Defense Construction (1951) Limited
Chairperson	Farm Credit Canada
President and Chief Executive Officer	Farm Credit Canada
Vice-Chairperson	Farm Products Council of Canada
Chairperson	The Federal Bridge Corporation Limited
Commissioner	Financial Consumer Agency of Canada
Chairperson	First Nations Financial Management Board
Chief Commissioner	First Nations Tax Commission
Deputy Chief Commissioner	First Nations Tax Commission
Director	Freshwater Fish Marketing Corporation
Director (Federal)	Hamilton Port Authority
Sergeant-at-Arms and Corporate Security Officer	House of Commons
Member	International Authority
Commissioner and Chairperson	International Joint Commission
Member (appointment to roster)	International Trade and International Investment Dispute Settlement Bodies
Vice-Chairperson	Invest in Canada Hub
Chief Executive Officer	The Jacques Cartier and Champlain Bridges Incorporated
Librarian and Archivist of Canada	Library and Archives of Canada
President and Chief Executive Officer	Marine Atlantic Inc.
Member	National Capital Commission
Government Film Commissioner	National Film Board
Chairperson	National Research Council of Canada
President	Natural Sciences and Engineering Research Council of Canada
Auditor General of Canada	Office of the Auditor General
Canadian Ombudsperson	Office of the Canadian Ombudsperson for Responsible Enterprise
Chief Accessibility Officer (Anticipatory)	Office of the Chief Accessibility Officer
Ombudsperson	Office of the Ombudsperson for National Defence and Canadian Forces
Director (Federal)	Oshawa Port Authority
Chairperson	Pacific Pilotage Authority
Chief Executive Officer	Parks Canada
Vice-Chairperson and Member	Patented Medicine Prices Review Board
Member	Payment in Lieu of Taxes Dispute Advisory Panel
Commissioner	Public Service Commission
Member and Alternate Member	Renewable Resources Board (Gwich’in)
Member and Alternate Member	Renewable Resources Board (Sahtu)
Chairperson and Vice-Chairperson	Royal Canadian Mounted Police External Review Committee
Principal	Royal Military College of Canada
Vice-Chairperson (all streams)	Social Security Tribunal of Canada
Chairperson	Telefilm Canada
Member (Marine and Medical)	Transportation Appeal Tribunal of Canada