Канаданың Орталық Банкі

Central bank of Canada
the central bank of Canada

The Bank of Canada (BoC; ) is a Crown corporation and Canada's central bank. Chartered in 1934 under the Bank of Canada Act, it is responsible for formulating Canada's monetary policy, and for the promotion of a safe and sound financial system within Canada. The Bank of Canada is the sole issuing authority of Canadian banknotes, provides banking services and money management for the government, and loans money to Canadian financial institutions. The contract to produce the banknotes has been held by the Canadian Bank Note Company since 1935. The Bank of Canada headquarters are located at the Bank of Canada Building, 234 Wellington Street in Ottawa, Ontario. The building also used to house the Bank of Canada Museum, which opened in December 1980 and temporarily closed in 2013. As of July 2017, the museum is now located at 30 Bank Street, Ottawa, Ontario, but is connected to the main buildings through the Bank of Canada's underground meeting rooms.

Prior to the creation of the Bank of Canada, the Bank of Montreal, then the nation's largest bank, acted as the government's banker, and the federal Department of Finance was responsible for printing Canada's banknotes. In 1933, Prime Minister R. B. Bennett instituted the Royal Commission on Banking and Currency and it reported its policy recommendations in favour of the establishment of a central bank for Canada. The Royal Commission's members consisted of Scottish jurist Lord Macmillan, Bank of England director Sir Charles Addis, Canadian former Finance Minister William Thomas White, Banque Canadienne de Montréal general manager Beaudry Leman, and Premier of Alberta John Edward Brownlee. The bank was chartered by and under the Bank of Canada Act on 3 July 1934, as a privately owned corporation, a move taken in order to ensure the bank would be free from partisan political influence. The bank's purpose was set out in the preamble to the act: "to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of the Dominion". With the exception of the word "Canada" replacing "the Dominion", the wording today is identical to the 1934 legislation. On 11 March 1935, the Bank of Canada began operations, following the granting of royal assent to the Bank of Canada Act. In 1938, while William Lyon Mackenzie King was serving as prime minister, the bank was legally designated a federal Crown corporation. The minister of finance holds the entire share capital issued by the bank. No changes were made in the purpose of the bank. The government appointed a board of directors to manage the bank, under the leadership of a governor. Each director swore an oath of "fidelity and secrecy" before taking office. After the war, the bank's role was expanded as it was mandated to encourage economic growth in Canada. An Act of Parliament in September 1944 established the subsidiary Business Development Bank of Canada (BDC) to stimulate investment in Canadian businesses. Prime Minister John Diefenbaker's central bank monetary policy was directed towards increasing the money supply to generate low interest rates, and incentivize full employment. When inflation began to rise in the early 1960s, then Governor James Coyne ordered a reduction in the Canadian money supply. Since the 1980s, the main priority of the Bank of Canada has been keeping inflation low. As part of that strategy, interest rates were kept at a low level for almost seven years in the 1990s. Following the 2008 recession, the central Bank of Canada lowered interest rates to stimulate the economy, but did not practice quantitative easing, as it feared that dramatically increasing the money supply would lead to hyperinflation. Between 2013 and early 2017, the Bank of Canada temporarily moved its offices to 234 Laurier Avenue West in Ottawa to allow major renovations to its headquarters building. In mid 2017, inflation remained below the bank's 2% target, (at 1.6%), mostly because of reductions in the cost of energy, food and automobiles; as well, the economy was in a continuing spurt with a predicted GDP growth of 2.8 percent by year end. On 12 July 2017, the bank issued a statement that the benchmark rate would be increased to 0.75%. "The economy can handle very well this move we have today and of course you need to preface that with an acknowledgment that of course interest rates are still very low," Governor Stephen Poloz subsequently said. In its press release, the bank had confirmed that the rate would continue to be evaluated at least partly on the basis of inflation. "Future adjustments to the target for the overnight rate will be guided by incoming data as they inform the bank's inflation outlook, keeping in mind continued uncertainty and financial system vulnerabilities." Poloz refused to speculate on the future of the economy but said, "I don't doubt that interest rates will move higher, but there's no predetermined path in mind at this stage". By the end of 2018, the Bank of Canada had raised rates up to 1.75% from a low of 0.5% in May 2017 in response to robust economic growth. Rates remained at 1.75% for the duration of 2019. In March 2020, interest rates were quickly lowered to 0.25% in response to the economic conditions caused by the COVID 19 pandemic. Additionally, the Bank of Canada undertook the controversial practice of quantitative easing, whereby the Central Bank increases the money supply to create funds for government spending. The sudden increase in the money supply contributed to Canada's inflation rate reaching 4.8%, the highest in over 30 years. By October 2021, the Central Bank stopped its practice of quantitative easing, and accelerated the timeline of increasing interest rates to pre pandemic levels. In March 2022, The Bank of Canada raised its benchmark interest rate for the first time in over three years, claiming that future rate increases are needed to fight inflationary pressures expected to worsen due to the Ukraine war. Canada's central bank raised its overnight rate goal by a quarter percentage point to 0.50 percent. After the Bank of England, the Bank of Canada is the second Group of Seven central banks to raise rates since the outbreak began. On 29 November 2022, the Bank of Canada reported its quarterly earnings for the third financial quarter of that year. It reported a loss of C$522 million. This was the first time in its history that it reported a loss. This loss was first reported on in a 12 September 2022 op ed in the Toronto Star. The op ed blamed the bank's emergency quantitative easing policy it took following the Covid 19 pandemic. The bank responded to the op ed saying that they do expect to return a loss as "the bank's interest expense is growing because of increases in the interest rate that we pay on deposits."

The Bank of Canada is structured as a Crown corporation rather than as a government department, with shares held in the name of the minister of finance on behalf of the government. While the Bank of Canada Act provides the minister of finance with the final authority on matters of monetary policy through the power to issue a directive no such directive has ever been issued. The bank's earnings go into the federal treasury. The governor and senior deputy governor are appointed by the bank's board of directors. The deputy minister of finance sits on the board of directors but does not have a vote. The bank submits its spending to the board of directors, while departmental spending is overseen by the Treasury Board with their spending estimates submitted to Parliament. Its employees are regulated by the bank and not the federal public service agencies. Banknotes in circulation have increased from $70 billion at the end of 2014 to $76 billion at the end of 2015. The Bank of Canada lists cash on its 2014 balance sheet at $8.4 million in currency and foreign deposits. The Bank of Canada's books are audited by external auditors who are appointed by the Cabinet on the recommendation of the minister of finance and not by the auditor general of Canada.

The Bank of Canada 2008 balance sheet expanded to $78.3 billion from $53.7 billion from the previous year (an increase of roughly 50%), as the bank created new money to fund emergency loans to Canada’s major banks by purchasing their assets on a temporary basis. After the financial crisis, these emergency asset purchases were unwound and the value of the assets deducted from the central bank's balance sheet. This central bank transaction was referenced under "securities purchased for resale" from Canada's major banks. It was termed advances to members of the Canadian Payments Association and were liquidity loans made under the bank's standing liquidity facility as well as term advances made under the bank's commitment to provide term liquidity to the Canadian financial system.

The Bank of Canada has a large economic research staff which prepare reports independently from the bank's Governing Council. This research may support the prevailing policy views of the Governing Council, but may also differ from official Bank views with the opinions expressed being those solely of the authors. The analytical notes, discussion papers and working papers prepared by the bank's economic staff are published on the bank's website and in its online monthly Research Newsletter, several are published in the quarterly Bank of Canada Review.

The Bank of Canada has a team of chemists, physicists, and engineers it had assembled for the development of the Canadian Journey Series, who determine potential counterfeiting threats and assess substrate materials and potential security features for use in banknote designs. It is part of the "Four Nations Group" of central banks, which includes the Reserve Bank of Australia, the Bank of England, and the Bank of Mexico, that collaborate on banknote security research, testing, and development. The Conservative Party of Canada leader, Pierre Poilievre, had criticized Tiff Macklem and the Bank of Canada during his candidacy, accusing the institution of being "financially illiterate" for forecasting that there would be deflation as opposed to inflation during the pandemic, to which the bank's deputy governor Paul Beaudry responded by stating "The aspect that we should be held accountable is exactly right".