We need to raise our game as a country – reviving Canada Savings Bonds would help #CanadaFinance

For a True North strong and free, buy Canada Savings Bonds.

There you go, the first draft of a marketing campaign for a revived version of a one-time fixture in Canadian personal finance. CSBs were eliminated – you could say euthanized – in 2017. It’s time to bring them back to productively harness today’s patriotic Buy Canada movement.

We have a history in this country of lending money to the government in dire times. In the two world wars, Victory Bonds raised billions of dollars to cover the cost of military operations.

We are very far from that level of emergency right now, and yet there is a sense that this is a pivotal moment in Canadian history. Trade threats from the United States and comments from the President about annexation raise questions about our ability to defend our economy and sovereignty.

A Canada Savings Bonds relaunch would be a way to raise money to build Canadian independence. Forget about adding the proceeds from a bond sale into general government revenue; instead, the money could be sequestered in a special account overseen by an all-parties board with business and labour membership as well.

The funds could be put toward the cost of projects such as pipelines to get Western oil and gas to the East Coast, an Arctic military base and ice breakers or high-speed rail in Central Canada. The goal of this spending would be to make Canada more productive and self-sufficient.

Marketed well, CSBs would help pry loose some of the “excess savings” sitting in bank accounts and other savings products that pay less and less these days. In a recent summary of where the economy is right now, TD Economics said there is $153-billion more in savings than there was before the pandemic.

This money is mainly held by financially fortunate households who found themselves spending less during the pandemic. Some of it could help support the economy in a trade war – patriotic spending, in other words. And some could productively move into CSBs.

For this to happen, CSBs would need to offer a competitive interest rate. Not necessarily top of the market, but enough to cleanly beat what the big banks offer. People would buy them to support the country, but not at the cost of a decent return on their money.

They would be risk-free because they would be backed by the federal government. Federal finances need a firm hand in the future to eliminate the budget deficit, but our overall debt is still manageable enough that Canada gets the top score, AAA, from several bond-rating agencies. The U.S., by the way, has a worse problem with deficits and debt.

A unique aspect of CSBs was how widely used they were, often through workplace payroll deduction plans. To keep overhead to a minimum, CSBs 2.0 would be sold mainly online. Banks could be drafted into the program by selling CSBs in branches for seniors and others who prefer face-to-face interactions.

Employers these days worry about employees being distracted by their finances. Offering CSBs to workers would be a way of promoting saving in the most effective way possible: by deducting them off the top of paycheques, just as with Canada Pension Plan premiums.

Things move quickly these days, which means locking money up for a lengthy period in CSBs would be a turnoff. A practical approach would be to set a five-year term, with a window each year to cash out early with no penalty. An interest-rate bonus might help people stay for the duration.

CSBs died because interest rates bottomed out and better deals were available from emerging competitors in the financial world. If you’re under the age of 55, you’re as nostalgic for CSBs as you are for dial-up internet.

But CSBs are right for these times. Exceptional events in the U.S. have motivated Canadians to support the economy by spending their money at home. Buying Canadian-sourced lettuce and mustard is great, but we can do more.

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