Carney urges firms to spend cash or return to shareholders

Bank of Canada governor Mark Carney says companies sitting on piles of cash need to give it back to shareholders or spend it on expanding their businesses.

He says holding on to cash only amounts to "dead money."

Carney told a Canadian Auto Workers union gathering that companies should give cash back to their shareholders if they can't come up with a better plan.

"The level of caution could be viewed as excessive," he said. Aboutcorporate managers, he said: "Their job is to put money to work and if they cant think of what to do with it, they should give it back to their shareholders."

The bank governor was responding to a question about a study that suggests Canadian businesses are sitting on some $500 billion in cash assets.

The Bank of Canada says business investment and consumer spending remain the chief support systems for the recovery.

But business investment is expected to be less robust than previously thought due to concerns about the global economy.

Carney says having the best financial system in the world is only really a value if it's also there in the tough times, adding the current level of caution could be viewed as excessive.

CAW union president Ken Lewenza says money can be reinvested in technology, the workplace, productivity and training to keep workers abreast of industry trends.

He says you can't sit on this pile of cash and expect the economy to move.