Essays /

Canadian Baniking Policy Essay

Essay preview







Canadian banking environment is relatively simpler and easier to understand. There are a small number of large banks that branch across the entire country and a company will typically have only one primary banking relationship. In Canada, the depository institutions or banks are divided into three categories: Schedule I, II, or III. Schedule I banks are Canadian-owned and are authorized to accept deposits and carry on a range of activities. There are currently 22 Schedule I banks in Canada, but they are dominated by the six largest with combined total assets of $1.8 trillion (USD) 1. The other types of banking institutions in Canada include 25-plus Schedule II banks, which are subsidiaries of foreign banks authorized to accept deposits and provide a ranges of services, and about 20 Schedule III banks that are branches of foreign banks with limitations on their activities. In Canada, the typical commercial bank account pays interest on positive balances, while charging interest on negative balances (overdraft banking). Canadian banking customers also have the ability to open accounts in currencies other than the Canadian dollar, which are known as foreign currency accounts. Moreover, central bank in Canada (the Bank of Canada) involves itself in the day-to-day activities of the chartered banks. While the roles of supervision and “lender of last resort” are similar to those of the Federal Reserve, the Bank of Canada does not participate in the operation of the payments system.2.



1 Canadian Bankers Association. Canadian Bankers Association, 2


Money placed into a banking institution for safekeeping. Bank deposits are made to deposit accounts at a banking institution, such as savings accounts, checking accounts and money market accounts. The account holder has the right to withdraw any deposited funds, as set forth in the terms and conditions of the account. The "deposit" itself is a liability owed by the bank to the depositor (the person or entity that made the deposit), and refers to this liability rather than to the actual funds that are deposited3. Thus, Bank deposits subject to check are the claims of the creditors of a bank against the bank, by virtue of which they may, on demand, draw by check specified sums of money from the bank. Since no other kind of bank deposits will be considered by us, we shall usually refer to "bank deposits subject to check" simply as "bank deposits." They are also called "circulating credit." Bank checks, as we have seen, are merely certificates of rights to draw, i.e. to transfer bank deposits. The checks themselves are not the currency; the bank deposits which they represent are the currency4.



Monetary policy refers to any of a number of government measures undertaken to affect financial markets and credit conditions with the ultimate objective of influencing the overall behaviour of the economy. In Canada, monetary policy is the responsibility of the Bank of Canada, a federal crown corporation that implements its policy decisions largely through its ability to alter the Canadian money supply. The money supply is that portion of the financial wealth of Canadian households which has sufficient liquidity to be considered money. At the least it includes coin, currency, and chequing-account deposits in chartered banks, all of which have perfect liquidity in that they represent, at face value, an immediate means of 3<> 4<> 5<>


payment for purchases made. Some economists broaden the money-supply definition by including additional chartered-bank deposits (eg, savings accounts) or deposits in other financial institutions such as trust companies or credit unions.

A. Control of the money supply

The Bank of Canada is not able to control the money supply directly, because the deposit portion of the money supply results from decisions made within the private Banking system. By taking deposits from individual Canadian households and firms and then lending these funds, the commercial banks, in essence, "create" money because, in theory, the new funds...

Read more


-3 -93 -97 -98 /...11 /2010/08/commercial-banking-in-the-u-s-versus-canada/#_edn10 /2010/08/commercial-banking-in-the-u-s-versus-canada/#_edn10. /articles/monetary-policy /en/. /en/..........3 /library/ypdbooks/fisher/fshppm3.html /terms/b/bank-deposits.asp#ixzz2lmfvgrim /wp-content/uploads/2010/01/tr81.pdf............. 0.65 0.650 0.70 0.75 0.750 0.85 0.90 0.900 0.95 000 1 1.00 1.000 1.10 1.150 1.35 1.5 1.8 10 1000 106 11 119 12 13 14 15 16 179 18 180 1950s 1954 1960s 1961 1967 1970 1970s 1980 1980s 1984 1987 1990 1990s 1991 1992 1993 1995 1996 1997 1999 2 20 2006 2012 2013 21 22 25 269 3 33 38 4 41.7 44 45 46 5 50 500 6 7 75 79 8 8.5 86 89 9 90 99 999 abid abil abl academ accept accomplish accord account acquir acquisit across acss act action activ actual acut ad addit affect agre agreement almost alreadi also alter altern although amend american among amount annual anoth api appendix appli applic approach appropri area aris asset associ attempt author autom automobil averag b b2b backup balanc banik bank banker base basic bba becom behaviour bill bmo bond boston branch broad broaden budget bulk busi business-to-busi c cad call canada canada13 canadian canadian-own canadian-us cannot capac card carri case cash cashabl categori caus ceil cent central centuri certain certif challeng chang charg chart charter chartered-bank check chequ chequing-account chile choic choos cibc circul circumst claim clear co co-op co-oper co-ordin coin combat combin commerci compani compar competit complic compound conceptu concern conclus condit conflict conglomer conserv consid consider constrain consult consum content contenti contractionari contrast contribut control convent convers cornerston corpor correspond counterpart countri cours cpa creat creation credit creditor cross cross-purpos crown currenc currency4 current custom cycl cyclic da daniel day day-to-day debat decad decades6 decis declin decreas definit degre demand demograph deposit deposited3 depositor depositori depreci deriv design desjardin despit detail determin develop developedcountri differ direct disagr discuss dispar distinguish divid dollar domin downturn downward draw e.g e.p earli earlier earn easier econom economi economist edit effect effici effort eg either elect electron elimin emphas employ encompass enhanc enter entir entiti entrench environ equiti equiva equival erod especi essenc essenti even eventu evid exact exampl exceed except excess exchang exist expand expans expansionari expenditur expens explicit extent f face facilit factor factual fall feb feder fedwir fee final financ financi financial-servic firm fiscal fix fixed-r fixed-term flatten fledg float floating-r flotat flow focus follow forc foreign forth fraud free freedman frequent full full-fledg fund furstenberg furthermor g.m general gic goodlet govern government-insur governor gradual group growth guarante guarente h ha half hamper hand handl hassanwalia heavi heavili held help henc high higher highest hold holder hon hous household howev hsbc i.e idl ie ignor ii iii imag immedi impact imping implement import incid includ incom increas independ index indic indirect individu industri inflat inflation-reduct influenc ing initi institut insur insured.9 inter inter-tempor interest intermedi intern interrel invest involv irreconcil issu item iv jan job jodhpur joint judgement kartikay key khetarp kind kluwer known larg larger largest last late law lead least legisl lend lender level liabil liber like limit line link liquid littl llb loan long long-term longer look loss lost low low-yield lvts m made main maintain major make manag mani manipul market matur maturity/annual may mean measur mechan meet mere merger method mid mid-1960s million minimum minist mmmfs model monetari money money-cr money-suppli moneysuppli month month/1 montplaisir moreov mortgag multipli must mutual nafta nation natur need negat neufeld new next non non-cash non-insur non-regist non-regul nonetheless nonscotiabank note nov number object occur off off-balance-sheet offic often one one-half one-third onequart ongo open open-market oper opportun opposit option ordin outcom output overal overdraft owe own paid pain paper paper-bas part particip particular pay payment pension per percent perfect perhap period perman permit person pillar place plant plus polici policy5 polit portion posit possibl post potenti power precis present pressur prevent price priceset primari primarili privat probabl process product program promot properti provid provis public publish purchas purpos put quarter question rais rang rapid rate rather ratio rbc re reaffirm real real-tim recent recess recov redeem reduc reduct refer reflect regist regul regular relat relationship releas repres requir reserv residenti residu resign resort respons rest restrain restraint restrict restructur result retain revenu revers review right rise role rose run safekeep said sale same-day save schedul secondari sector secur securit see seem seen semest sequenc servic set settl settlement sever shall share sharpli sheet shift short short-term signific similar simpler simpli simul simultan sinc six small smaller sometim sourc specifi speed stabil start statist still stimul stock strategi strengthen strong stronger structur subject subsequ subsidiari success suffici sum summar supervis suppli sustain system system.12 system.2 take target taxat td te techniqu technolog tempor tend term theori thereaft therefor thing third though three thus time tool total toward trade trade-off tradit transact transactions-thos transfer treasuri trend trillion trust two two-third type typic u.s ultim uncertainti understand undertaken undoubt unemploy unfair union univers unresolv upward us usd use usual v valu vanciti variabl vault vi viewpoint vii virtu virtual vis vis-à-vi von wage want war wealth well wherebi whether winter withdraw within work worldwid written year yield à