Bank of Canada (BoC) - Bank of Canada

The Bank of Canada is referred to differently as Banque du Canada. This nomenclature is mainly due to the fact that a large number of Canadian residents are French. This institution acts as a central bank - it is the equivalent there National Bank of Poland.

The bank was created on the basis of the act Bank of Canada Act on 4 July 1934 year. The institution started its activity less than a year later. The document based on which it was created determines the detailed conditions and scope of its functioning. For the sake of curiosity, it can be added that 100 percent of the shares of the central bank of Canada has a Canadian Ministry of Finance. To slightly refine this information, there are exactly one hundred thousand shares with a face value of 50 dollars each. The bank's securities are in the hands of the finance minister. Any profit of BoC is at the same time the profit of the Treasury.  The head office of the bank is located in the capital of the country, Ottawa.

Be sure to read: FED - One of the most influential institutions in the world

A brief history of BoC

The Canadian Bank's history goes back exactly on 11 in March of the 1935 year. His activity is not too long (compared to other central banks). Canadian institution has just barely over 80 years of operation. Interestingly, at the beginning of its existence Bank of Canada  he was a private entity. In some countries central banks remain outside the state supervision. In his case, this was to prevent government and political pressure.

The person who contributed to the creation of BoC was the Prime Minister of Canada RB Bennett, who in the 1933 year created the Royal Commission on Banking and Currency (Royal Banking and Currency Committee). It was on his initiative that the project of this institution had a chance to come true. Thanks to his determination, the idea was supported by the Prime Minister of Alberta (one of the Canadian provinces). The main motivator for the creation of Banque du Canada became the farmers complaining about the drastically different costs of credit. They demanded that they be regulated at central government level.

After almost four years of operation, the Bank of Canada has a bit "Revalued". This entity became a special type of state-owned enterprise and officially belonged to the Canadian authorities. Therefore, he received several new rights. This includes, among others, printing of banknotes and the functions of a government banker, which consisted in servicing government transactions and cash flows.

One of the most interesting episodes in the functioning of BoC (rare in the world) was the creation in 1944 of its subsidiary - Business Development Bank of Canada (BDC). It was to play a key role in stimulating investments of enterprises operating in the state.

Check the current USD / CAD chart

Tasks and powers of the Bank of Canada

At the beginning, it is worth mentioning the most important issue resulting from the cooperation and dependence of the bank and the state. The Bank of Canada Act is written:

"There should be no disagreement between the ministry and the bank regarding the planned monetary policy. The Minister may, after consultation with the Governor of the Bank of Canada and with the consent of the Governor General, give the Governor of the Bank guidelines on conducting monetary policy in specific circumstances and for a limited period, and the bank's activities must comply with these guidelines. "

It is easy to conclude that monetary policy is not an individual issue of a bank. The Minister of Finance and the Government have a significant influence on its functioning.

Stephen Poloz, the current Governor of the Bank of Canada

The statutory obligations of the bank are quite classic. Practically in most of the provisions or legal acts that define the framework for the functioning of these institutions, there is information about maintaining the stability of the financial system and ensuring its security. Translating this into reality, BoC's main task is to control and maintain low and stable inflation.

The Bank of Canada is the only institution authorized to issue banknotes. I'm talking about the Canadian dollar, of course. BoC does not distinguish itself with exceptional entitlements with respect to other institutions of this type in the world. Its basic task (in addition to the above) is to ensure a smooth economic development of the state and effective management of government funds.

Authorities of the Bank of Canada

The structure of the bank's authorities is not very complicated. The BoC's activity is determined by the body that we call the Governing Council.  It consists of:

• Governor (currently from 2016, this function is exercised by Stephen Poloz)
• Senior Deputy Governor
• Deputy Governor (there are more than four of them)

The main role of the Governing Council is to conduct monetary policy in the state, to promote an effective financial system (creating new solutions to improve it) and to establish a strategic direction in which the BoC should move. The Bank's management focuses mainly on four areas of activity, namely monetary policy, financial system, fund management as well as the currency market.