Public banking allies in Canada are currently waging a feisty legal battle to turn the Bank of Canada back into a public bank, as it was originally intended. And they're surviving attempt after attempt by the Canadian government to shoot down the lawsuit.
Previously, only alternative media were reporting the story of the scrappy and creative legal battle being waged by Rocco Galati and members of the Committee for Monetary and Economic Reform against the Bank of Canada. But on March 23, 2015, the Toronto Star picked up the story, declaring the case a struggle "intended to do nothing less than force the Bank of Canada to reorient its activities on behalf of Canadians."
Maybe the mainstream media is starting to pay attention because Committee for Monetary and Economic Reform v. Canada (2014 FC 380) has survived what appears to be every procedural objection the Canadian government has thrown at these plaintiffs. As you might expect, there are numerous procedural rounds in a case like this. The government has argued that the plaintiffs lack standing to sue, and that the case is a political question rather than a legal one. Judges have given the plaintiffs room to amend their claims to meet tough legal criteria, and have allowed the case to move forward, most recently on January 29 of this year, leaving the government until this week--on March 29--to make a final procedural appeal to the Supreme Court.
The Bank of Canada was nationalized in 1938 and is wholly owned by the Canadian people. Between 1938 and 1974, the federal government borrowed at low or no interest from the bank. But in 1974, Canada embraced monetarism, which helped usher in the neoliberal policies of North American countries in the 1980s and 1990s. The Canadian government began to borrow from private foreign banks rather than financing its own public programs. Massive public debt was the result.
In 2011, COMER and two private citizens sued the Canadian government, arguing that the Bank of Canada “is the only central bank among the G-8 countries that is a ‘public’ bank created by statute and accountable to the legislative and executive branches of Government.”
Les Whittington, the Ottawa Bureau reporter for the Toronto Star, quotes
Ann Emmett, a former teacher who now chairs COMER, said she “absolutely” believes foreign banks are controlling the Bank of Canada’s actions.
“I have to tell you that the lawsuit has sparked interest around the world,” Emmett added. “They are not going to be able to put the genie back in the bottle.”
The lawsuit also alleges the federal finance minister is depriving MPs of their right to properly vet government spending by inappropriately calculating available financial resources.
For COMERS to ultimately prevail in the case, a court must decide that the government has no discretion about how the Bank lends or facilitates the lending of money. The government maintains, because of the Bank Act, that the bank “may” lend like a public bank – not that it must.
But regardless of how the courts ultimately rule, COMERS has already won a huge victory--making the world more aware of the public financial responsibilities of governments, and that there's more than one way to run an economy. Interviewed by Whittington for the Toronto Star piece, Rocco Galati, who’s won some important Canadian legal battles, calls it the most important case he’s ever done:
“It’s by far the most serious and important case I’ve ever done,” said Galati, who gained national prominence in a classic David versus Goliath case last year in which he moved to block Prime Minister Stephen Harper’s appointment of Justice Marc Nadon to Canada’s top bench.
Of the current case, Galati says, “It impacts the entire country in a profound way, right down to the bone of our economics and the history of the way we have maintained and lost, through illegal action, our independent monetary policy. It’s huge.”