Bank of Canada
The Bank of Canada is established in 1934 and its current governnor is Mark Carney.
The purpose of the Bank of Canada are:
1. Banker to commercial banks.
  • Chartered banks keep a fraction of their reserve in the bank of canada
  • lender of last resort
  • Set reserve requirements
2. Controller of the money supply.
  • Too much money leads to inflation
  • Too little money leads to unemployment
  • Only institution in canada allowed to print money
3. Banker to the federal government.
  • The federal government keeps a checking account with the Bank of Canada
  • If the government needs to borrow money, it issues bonds which it sells to the Bank of Canada
  • Fiscal Agent
4. manager of the country's monetary policy.
  • Subject to approval by the Federal Government
  • Sets the Bank rate and target overnight rate
5. supporter of the fiduciary monetary system.
  • Fiduciary monetary system is based on trust or confidence
  • People accept currency because they are confident other will accept it from them
  • Bank of Canada acts to prevent a run on the Bank
  • CDIC (Canada Deposits Insurance Corporation- a crown corporation) Insurance personal banks accounts up to $100,000 per account
Dr. Stephanie Powers, “ Monetary Policy” slides 17-20,23 (ECON 101) at Red Deer College,accessed April 18, 2012