Carney to business: ‘get off your wallets’
Bank of Canada governor says firms keeping big stockpiles of cash amount to "dead money" in the economy
TORONTO—Bank of Canada governor Mark Carney has some blunt advice for Canadian companies sitting on piles of cash—give it back to shareholders.
The country’s top central banker says while companies might be holding on to cash because of global economic instability, those funds amount to “dead money” for the economy.
Speaking in Toronto, Carney says if companies can’t think of a productive use for the cash they should “give it back to shareholders and they’ll figure out what to do with it.”
The bank governor was responding to a question about a previously released Canadian Labour Congress study that suggests Canadian businesses are sitting on some $500 billion in cash assets.
And Prime Minister Stephen Harper has said, on a global scale, there is “money sitting on the sidelines” that can revive the world economy.
In July, the Bank of Canada kept its benchmark interest rate at one per cent until at least the next policy meeting in September.
The bank says business investment and consumer spending, supported by super-low interest rates, remain the chief support systems for the recovery.
But business investment is expected to be less robust than previously thought due to concerns about the global economy.