The Bank of Canada says that it will be buying fewer government bonds, but more Treasury bills.

The Bank says the changes are for balance-sheet purposes only and have no implications for monetary policy. With that in mind, it plans to scale back its participation in auctions of 10-year and 30-year bonds and increasing its participation in treasury bill auctions, effective Oct. 1.

Starting in 1996, the Bank began adjusting the relative amounts of Government of Canada treasury bills and bonds held on its balance sheet to more closely approximate the proportions of outstanding government debt. This adjustment involved an increase in the Bank’s participation at bond auctions and reduced participation at treasury bill auctions.

The government intends to decrease the proportion of fixed-rate debt outstanding from two-thirds to 60% by 2007/08. As a result, the Bank says a modest realignment of its balance sheet will be needed over the same period to ensure that it continues to reflect the proportions of outstanding debt.