Canada Savings Bond

Canada Savings Bonds were investment instruments that were offered by the Government of Canada between 1946 and 2016, sold between early October and December 1 every year. Unlike a true marketable bond, Canada Savings Bonds or CSBs are debentures.

The financial product were issued by the Bank of Canada and claimed to offer a competitive rate of interest and had a guaranteed minimum interest rate.

Canada started selling war bonds in 1917 to raise money during World War I for the Allies of World War I. Five bond campaigns were held from 1915-1919. To advertise the purchasing of Victory Loans, the Victory Loan Dominion Publicity Committee created artwork, held parades, and had celebrity endorsements. Community members who bought many Victory Loans were given a Victory Loan Honour Flag as a thank you.

Canada Savings Bonds were first offered in 1946 in an effort to replicate the success of Victory Bonds.

In 2004, consultants gave the Department of Finance a report suggesting the CSB program be scrapped, giving an overall program cost savings of about $650 million in 9 years. And with record budget surpluses recorded by the Liberal government since 1997, the importance of CSBs to finance the government had waned. Then-finance minister Ralph Goodale rejected the recommendation, and opted to have the program changed to be more competitive and attract investors.

Many Canadians still rely on this program for their investment portfolio, and the program is recognized by 2 out of 3 Canadians as their first investments. This program recognition may give potential to an improved and more popular program. This may suggest that the program may not be scrapped for many years to come.

The CSB website announced that effective fall of 2012 the term of all new bonds will be reduced to three years.

The value of bonds issued declined from $55 billion (Canadian) in 1987 to just over $6 billion in 2015.

A government-commissioned study by KPMG in June 2015 recommended canceling the program. Despite this recommendation, the Department of Finance ruled out canceling the program despite the estimated $58 million annual cost of running the program.

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Wikipedia