Business Overview: The Bank of Canada

             Canada's central bank, the Bank of Canada, is a largely unknown institution to the majority of Canadians. Despite its small size and obscurity, however, the Bank of Canada plays a vital role in the nation's economy. With a budget that is dwarfed by most minor federal agencies, the Bank maintains a policy capacity that allows it to take a fast and effective role in influencing Canada's economic climate. The Bank is given autonomy that is unparalleled by other agencies, exemplified by the fact that the Governor of the Bank is appointed to seven-year terms in which he/she is greatly shielded from political pressures. The internal structure of the Bank promotes the influence of the Governor, although all monetary decisions must take into account global conditions and inflationary goals.
             The Bank of Canada was created in 1934 with the passing of the Bank of Canada Act. The poor economic conditions during the depression prompted demands for government intervention into the economy, and the creation of the Bank was a way for the government to gain control of monetary policy. Canada was comparably late in creating a central bank: the United States has done so in 1913 and the UK way back in 1694. The original mandate of the Bank, as laid out in the Bank of Canada Act, was to regulate credit and currency, protect the value of the dollar from undue fluctuations and "promote the economic and financial welfare of the Dominion." The objectives given to the bank were broad and left a lot up to the will of the Governor. The original ownership structure of the Bank was made up of private shareholders who could not work in the financial sector. The intent was to create a separation between the Bank and the financial community, as well as the Bank and the government itself. The government, in an attempt to gain further control over monetary policy, nationalized the Bank in 1938 making it a crown corporation. Throughout its history, the themes of mand...

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Business Overview: The Bank of Canada. (1969, December 31). In MegaEssays.com. Retrieved 04:47, March 28, 2024, from https://www.megaessays.com/viewpaper/15353.html