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 having done so in 1913 and the UK way back in 1694. The original man
While inflation targets have eased the question of mandate somewhat, there still exists the potential for conflict over the autonomy and role of the Bank. The Bank recently decided to privatise this department and has transferred approximately 430 employees to a firm known as ADS. As mentioned above, the Board is regionally diverse, though, out of fifteen members there is only one visible minority represented. Inter-dependence with the American economy means the governor must take policy and rate cues from the Federal Reserve, while the development of global currency markets demand some coordination with other G-7 countries. The objectives given to the bank were broad and left a lot up to the will of the Governor. The last of the four functions of the Bank of Canada the implementation of monetary policy. The minister and the Governor are meant to have weekly meetings to discuss monetary policy. The Governing Council of the Bank is responsible for "formulating and implementing policy and for dealing with broad organizational and strategic issues" . The Board consists of 12 members appointed by the finance minister, the governor and senior deputy governor, as well as the deputy finance minister, who sits only as an observer. He was an early advocate of free trade, and while serving in the department of finance in the 1980s, he was one of the architects behind the GST . Understanding prevailing conditions allows the Bank to set interest rates to a level that benefits the overall well-being of the country. This would give a different perspective to the national economic climate and promote the disseminate of information about the Bank to the general public. 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 Board of Directors is a body created to oversee and advise the Bank of Canada.
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