At the Bank of Canada, our largest liabilities are bank notes in circulation and deposits from the federal government, which are mainly backed by the assets in our investment portfolio. Almost all of the $ in assets held on our balance sheet consist of Government of Canada bonds and treasury bills.
These are acquired on a regular basis through primary-market purchases on a non-competitive basis. 7 We follow three principles in acquiring these assets: prudence, transparency and neutrality. Prudence is exercised primarily by selecting assets that have a low credit risk. We achieve transparency by communicating our balance-sheet activities to the public.