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Ottawa, September 19, 1996
1996-062

Canada Savings Bonds - Guaranteed Minimum Interest Rates for up to 10 Years

This year's Canada Savings Bonds will feature guaranteed minimum interest rates for up to 10 years. These rates will be increased if market conditions warrant. CSBs continue to be cashable at any time. The rate guarantee represents a major innovation in the marketing of CSBs - for the past two years CSBs have carried interest rates limited to three years.

In announcing the new rate guarantees, Finance Minister Paul Martin said the marketing of CSBs has not kept up with the array of new investment products now being offered Canadians, but that would soon change:

"What stands out for me is the simple fact that the financial markets and competitive offerings have evolved fast and furious, and we have been slow to adapt and respond. Getting government right means using innovation where and when it serves the public interest, and there is nowhere this should apply more than in managing our debt."

The minister also said that CSBs didn't just replace Victory Bonds after the Second World War: "To me CSBs are Victory Bonds, because they can play a powerful part in Canada's campaign for economic sovereignty and national debt control."

The minister announced the rate guarantees at the official launch of Canada Investment and Savings, the new name for the Canada Retail Debt Agency, established last year to revitalize the sale of Canada Savings Bonds and other Government of Canada retail debt products.

Agency President Jacqueline Orange outlined a number of other innovations that Canada Investment and Savings is working on to improve the quality, scope, and delivery of federal debt products retailed to Canadians.

They include:

• A new Registered Retirement Savings product to be introduced in time for the 1997 RRSP season;

• The startup this fall of a pilot project aimed at reducing the administrative burden of employers involved in the Payroll Savings Plan by between 70-90%, while offering employees daily interest rates and a year-round opportunity to opt in or out;

• The testing of "CSBs TO GO" at Post Offices and financial institutions - for Compound Interest Bonds of $1,000 or less in value, Canadians will be able to fill in a short application form and mail it directly to the Bank of Canada, receiving the bonds back by mail in December;

• Many of the financial institutions will sell CSBs for the first time through their 1-800 numbers;

• Allowing CSB sales Agents to appoint sub-agents, thereby adding potentially 30,000 to the CSB sales force, an increase of approximately 50%.

Mrs. Orange said Canada Investment and Savings is determined to begin to reverse the decline in CSB sales, which peaked in 1987:

"We want to enhance and expand the product line, to provide greater numbers of Canadians with investments that meet their individual needs. We want to give Canadians easier, faster and simpler access to our products through improved distribution. And we want to improve the branding of our product. And we're going to deliver on all three improvements."

Sale of 1996 CSBs will commence on October 15 and continue through November 1. The deadline for employers offering CSBs under the payroll savings plan will continue to be November 15. The exact number of guaranteed rate years attached to 1996 issue - and the rates themselves - will be announced in the second week of October.

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For further information:

CRDA Media Relations
(613) 995-8449
(613) 943-1299