Tired of watching your grocery bill climb while politicians in Ottawa play hot potato with the blame? "It's the Bank of Canada!" "No, it's corporate greed!" "Blame the U.S.!" Enough. What if we cut the excuses and made inflation their problem to solve? Imagine a system where new money flows straight from the government to build roads, schools, and jobs—not padded into bank profits or hidden in deficits. It's not radical; it's responsible. Enter the Sovereign Money Accountability Act—a straightforward bill to end the banking middleman, tame inflation, and pay down our $1.4 trillion federal debt. Here's how it works, adapted for Canada's parliamentary system.
Bill C-[Number] – 45th Parliament, 1st Session (2026)
Section 1: Short Title.
This Act may be cited as the "Sovereign Money Accountability Act of 2026."
Section 2: Establishment of Sovereign Money Issuance.
(a)
Direct
Issuance Authority.
Beginning on the effective date, all new base money (currency and reserves) shall be issued exclusively by the Minister of Finance, in coordination with the Bank of Canada as fiscal agent, and allocated directly to the federal budget for authorized expenditures. Chartered banks shall be prohibited from creating money through fractional reserve lending; all deposits shall be backed 100% by reserves. No new government bonds shall be issued to finance deficits; all borrowing shall be replaced by direct money issuance under this Act.
(b)
Phased
Implementation. Reserve
requirements for chartered banks shall increase as follows:
Year 1 (Effective Date): 33% on transaction deposits.
Year 2: 66%.
Year 3: 100%. The Bank of Canada shall provide transitional liquidity facilities to ensure smooth credit availability during the phase-in, capped at 10% of prior-year lending volume.
Section 3: Fiscal Accountability and Inflation Targeting.
(a) Annual Issuance Cap.
New money issuance shall equal projected real GDP growth plus an inflation target voted on annually by Parliament for the following fiscal year, as certified quarterly by the Parliamentary Budget Officer (PBO). The initial target shall be 1%, with a long-term aim of 0%. Issuance beyond the voted target requires a supermajority vote (two-thirds) in the House of Commons.
(b) Debt Paydown Mandate.
Structural
deficits shall not exceed 3% of GDP in any fiscal year, with
mandatory paydown of principal on outstanding debt using 20% of any
surplus. Violations trigger automatic spending sequester (5%
across-the-board) until compliance.
(c) Transparency
Requirements. The
Department of Finance shall publish a monthly "Money Flow
Report" detailing issuance, allocation, and impact on inflation
metrics, with PBO audits.
Section 4: Transition Protections.
Existing loans and deposits shall remain unaffected. A "Credit Continuity Fund" (capped at $25 billion) shall subsidize interest rate differentials for new mortgages and small business loans during the phase-in, prioritizing low-income households.
Section 5: Effective Date.
This Act takes effect 180 days after Royal Assent.
At its core, this ends the shell game: Right now, banks create 90% of our money through loans, fueling booms and busts while the government borrows to keep up. By routing new money straight to the budget, we tie issuance to real needs—matching GDP growth to keep inflation in check (historically ~2% when money tracks output). Expect ~$78 billion in annual new money flow initially (pegged to 1% inflation + 1.5% real growth on a $3.12 trillion Canadian GDP), fully covering recent deficits (~$62B in FY2023/24, ~$35B in FY2022/23) without bond sales or tax hikes. The 3-year phase-in avoids shocks: Banks build reserves gradually, credit flows steadily, and by Year 3, transparent voting on inflation targets makes fiscal choices public—Parliament decides the trade-offs, but voters see the consequences. It's like upgrading from a leaky bucket to a precision faucet—sustainable growth without the floods.
To accelerate the glide to 0% inflation, pair this with low-hanging waste reductions (e.g., IT modernization saving $10B/year, procurement streamlining $15B, and duplicate program cuts $5B—total ~$30B annually). These non-controversial tweaks (80% public support, no entitlement hits) could slash the needed target to ~0% right away, then sustain surpluses without political knives.
Government: A massive windfall injection of ~$78 billion annually (at the initial 1% target), directly into the budget to cover spending without bonds or tax hikes. Recent deficits would vanish overnight, making balance feasible without austerity—e.g., funding infrastructure or housing while chipping at debt. No more $50B+ interest drain to bondholders; surpluses accelerate paydown, easing future budgets.
Politicians: No more dodging blame—every inflation tick ties back to budget choices, forcing real accountability. But the upside? Claim legacy wins like "I voted for deficit-ending issuance and balanced the books," plus tools to fund popular programs (infrastructure, housing) without hikes. Voters reward results: Lower prices, debt relief, and a "fiscal hero" narrative that wins ridings.
Bay Street: Short-term jitters from tighter credit, but long-term gold. Investment firms pivot to fee-based advisory and underwriting (their 40% profit slice today becomes 70%), while funds feast on transparent fiscal data for smarter bets. No more bailouts—stability means fewer crashes, higher valuations across the board. Think: A leaner, meaner market without the moral hazard.
Bankers: The loudest gripes come here—they lose the "money printer" perk that juices 60% of earnings. But survival? Easy. Big players like RBC and Scotiabank (already 40% fee-driven) ramp up wealth management, payments, and global services, hitting 8–10% ROE post-phase-in. They can raise money to loan out by issuing more stock or bonds, while credit unions consolidate or specialize in relationship lending from real deposits. It's a wake-up: From gamblers to genuine stewards, with lower risk (goodbye, 2008-style runs).
Average Canadians (The Real Stars): This is where it shines. Your paycheck stretches further as inflation votes trend to 0%—no more surprise hikes from bank-fueled bubbles. Mortgages and loans? Locked for existing holders; new ones see just 0.5–1% rate nudges over 3 years, offset by the Credit Fund for families. Taxes? Balanced budgets mean no stealth hikes—surpluses could fund rebates or CPP boosts. And debt paydown? Your grandkids inherit a solvent nation, not a $2T IOU. Bottom line: More take-home pay, fewer recessions, and politicians who own the economy's health.
This isn't pie-in-the-sky—it's the fix we've needed since the Bank of Canada Act of 1934. What's stopping us? Only the status quo. Let's make money work for us again.