Bank of Canada

Definition

The Bank of Canada is Canada’s central bank, responsible for formulating and implementing monetary policy, promoting a safe and efficient financial system, issuing banknotes, and acting as the government’s fiscal agent. 

What is the Bank of Canada?

The Bank of Canada is responsible for formulating and implementing monetary policy to achieve the government’s inflation target, which is currently set at 2%. It uses tools such as the target for the overnight interest rate, open market operations, and forward guidance to influence economic activity and inflation.

The Bank of Canada promotes the stability and efficiency of the Canadian financial system by monitoring and assessing risks, providing liquidity to financial institutions when needed, and overseeing payment, clearing, and settlement systems.

Additionally, the Bank of Canada acts as the government’s fiscal agent, managing its bank accounts, issuing and redeeming government debt securities (bonds and treasury bills), and providing advice on debt management.

The Bank of Canada conducts research and analysis on economic and financial issues to support its policy decisions and enhance the understanding of monetary policy and financial markets.

Lastly, the Bank of Canada collaborates with other central banks and international organizations to promote global economic stability, coordinate monetary policy, and address international financial issues.