THE BANK OF
CANADA
INTEREST RATES
• The price charged or borrowing money
• Govt uses this to ensure economy has just the right
amount of money to purchase goods and services
without causing inflation or deflation
MONETARY POLICY
• A process by which the govt affects the economy by
influencing the expansion of money and credit.
• Agency this is done in is Bank of Canada
BANK OF CANADA -THERE WERE CONCERNS BY
BIG 6 BANKS
Fear: politicians would use govt run centralized banks to influence them
• Set up as a private corporation that sold shares to the public
• Limits placed on how many shares a person could own
• Only connection to govt was govt gets to choose deputy minister of finance to sit on
board as a non voting member
Fear: every chartered bank had power to issue their own bank
notes (paper money) good for them financially (dominion notes)
• Bank of Canada replaced Dominion notes with our money
FUNCTIONS OF THE BANK OF CANADA
• Director of monetary policy: controlling growth of
money supply in Canada regulating credit, currency and
interest rates
• Banker to Chartered Banks: chartered banks deposits
to bank of Canada. They use their accounts to settle
debt amongst themselves
• Banker to the Fed Govt: deposits and foreign
exchange reserves-holding of foreign currencies
and uses them when it intervenes in foreign
exchange market to manage CND dollar
• Issuer of Currency: issues paper currency, decides on designs of
notes, how much to make and try to eliminate problem of
counterfeiting.
• (Canadian mint does coins)
ORGANIZATION OF THE BANK
• Run by a board of directors appointed by govt
• Deputy governor holds position for 7 year term
Stephen S. Poloz is the Bank
of Canada’s ninth Governor.
He was appointed on 3 June
2013 for a term of seven
years.