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Central bank of canada

Introduction

The central bank of Canada as it is known famously has a long historical lineage. Generally the institution is referred to as Bank of Canada. This financial institution in particular acts as one major point for financial transaction and monetary policy in the country, so as to say. In recent years there have been major developments in the Central bank of Canada, and it will be interesting in exploring all the domains that get this Banking Institution the attention of the world.


Issues that matter when it account to Bank of Canada

As we are aware, banking institution acts as economic lifeblood of any country in particular, either; the case of the subjects can be broadened within the country such as India, UAE, US. However, to be specific here, the Republic of Canada as a country, and the Central Bank of Canada as an institution comes as a forefront, which is central to our discussion and analysis in parts and form. Before going into the intricate details of all the major and notable discussion on the subject matter, noting the issues that encompasses the Central bank of Canada since it time of establishment should in the overall undertaking of this reports make us familiar with the structure, the policy and most importantly the reforms that have over the period of time come of age.


Purpose

The purpose and objective of this report discussion is to analyze the overall factor that make up and accounts to the Central bank of Canada. For the starts, the historical development and progress of the Bank of Canada constitutes the initial part of our discussion. Further in that part, the organizational structure of the Bank of Canada in the country is broaden to assimilate and analyzed the critical areas of this banking institution and the activities that amounts to it, within the structure of its fur walls. Summing it all up, an undertaking in that respect should give a favorable, and free flowing analysis when it matter to core function that bank is known to advocate or to say the role it plays as a financial institution in Canada and its economy at large.

Hence, the following paragraph and successive discussion should facilitate an in-depth analysis that should encompass the notable development happening in the Central Bank of Canada. In that respects, historical date sheet and development of the bank comes as an initial part, which is as follows.


Historical developments of the Central bank: Central Bank of Canada

As the information can be gathered from the banking institution website (www.bankofcanada.ca ), there is a clear message that “the Central Bank of Canada was established and came to its operation in the early part of the year 1913, specifically when the apparent need for a central bank in Canada was felt in that period in its economy" (BankofCanada, 1995-2010). However, apart from the claims, conclusively, there is evidence that “the Central bank of Canada came into origination in the early part of the 1934, after the great depression in that period." (Gary Gordon, 2003, p. 181)

Development of the central banking institution in the western world, especially in Canada “can be looked as a phenomenon, and in the word of Gordon and Huang, central banking is a national phenomenon of sorts during the period in between the early 1920s and 1950s." (Gary Gordon, 2003, p. 181)

Looking at the above notable features, we come to the conclusion that the influence of the British regime in the banking institution in Canadian economy that was progressing and developing gradually in the earlier part of 1920s-50s was notable. Above all, the “establishment of the central bank of Canada rounded out in its essentials a structure that was progressively and gradually evolving for over a century in that period, prior to twentieth century, when the phenomena and hype of central banking institutions was at its peak." (William Thomas Easterbrook, 1988, p. 470).

To top it all, the necessity and needs of a central banking was felt in great measures, so as to say, and in that respect “the necessity of a central authority was responsible for the management of a country's monetary system was recognized with the creation of a responsible agency in facilitating al the banking needs and its administration at large" (William Thomas Easterbrook, 1988, p. 470).

Within such a development and since then, that is to say in the period between and prior to twentieth century, there has been no looking back for the progression of the central bank of Canada to be specific, and in that period “the spread of the central bank in majority and that also in “the twentieth century is likely to the growth of activist monetary policy related in the capacity." (Gary Gordon, 2003, p. 181)

Thus, when speaking of Canada Bank, its history and developments that nurtured it to its centralized origination and standing in structure, the financial reform that has been progressing over the years also comes into the analysis part and should be noted and not to be missed. As one scholar have put it, “the development and reform of the Canadian financial system to a greater extent reflects the impact and influences off the British origination and lineage. Secondly, the greater influence of the US is also probable, in that period when the successive World War was felt and witnessed, wherein the US was by far the largest trading partner with Canada, especially in the post-second world war era. (Siklos, 2003, p. 51)

Such developments by far and the increasing needs and requirement of central banking institution provided the Canada bank a solid platform to flow in the thick of time, and as history records shows, “growth in the Canadian economy during that era was largely due and owe it to the to the effect of central banking origination in Canada." (William Thomas Easterbrook, 1988, p. 445). Hence, analyzing the past records of Canada Bank, “shows a general belief among policy makers that lending apart from productive uses was unsound and uncalled for. Such a belief comes as a package of the Canadian banking philosophy of sorts, which prevailed during that period, so as to say." (Siklos, 2003, p. 56) However, noting the same, there is no clear and precise conclusion which we can make and arrive at out of any such developments and the general belief that withholds in the history of central Bank of Canada.


Canada Central Bank and its Structure

Structurally speaking, the central bank of Canada as a financial institution is made up of many parties. As one scholar put it, the formal structure of the bank of Canada is represented by the “board of directors and its responsibilities and operation also rests with the board of directors, which consists of fifteen members overall, starting with the governor, the chief executive officer (CEO), chairman of the directorial board and notably, twelve outside directors." (Xiang, 2009, p. 2). Thus these details in parts gives a clear structure of the overall make up when it calls for central bank of Canada.

In addition to the organizational structural process, “the board of the governing council of the Canada bank collectively take and dispatch with the responsibilities when it arises to any banking policy, be it internal or the external policy in that matter" (Xiang, 2009, p. 3). Hence in that capacity, to will be interesting to look within the domains of the banking policy and in particular how the central bank in Canada are structure in its truest sense of the term. For example, the committee as discussed above, and most importantly, the many branches and organization domain that are probable for banking institutions and in particular the central banking structure.

Furthermore, apart from the formality in the structural process of the organization, there is evidence and a general holding that “the bank of Canada is responsible for setting Canadian monetary policy, and in that capacity issuing currency and fund management and promoting the safety and its measure of the Canadian financial system" (Williamson, 1991, p. 13) constitutes the core structure of Canadian banking industry at large.

Hence, given the central term attached to Canada central bank, the same is also withhold and looked upon in that respect. Empirical research shows that “the structural banking process in Canada, and especially in the Canadian central bank is linked to external influences, which is an important part in the evolution of the banking structure" (William Thomas Easterbrook, 1988, p. 450). To top it all, the branches of Canada central bank over the years of its established, and after getting a solid hold in the Canadian banking industry “served as a cleaning agency in their districts, and promoted uniform currency and credit condition throughout the country. In that capacity, the flexibility of the banking needs in the country also was attended by Canadian central bank branches." (William Thomas Easterbrook, 1988, p. 451)

But what is more precise to Canada bank structure can be read from “an overview of the Canada bank itself, its role in reserve management which clarifies the bank position in the corporate/agent model structure, and overall highlights the unique perspective that Canada bring to its decisional process." (Age Bakker, 2007, p. 137). Analyzing the related discussion to central banking structure and in particular Canada central bank further down the line should be analyzed from the monetary policy applicable in the Canadian economy, in order to have a clear picture of the issue. The following discussion provides a clear rather than fragmented analysis of monetary policy accompanied by the overall structural process applicable.


Monetary policy, Roles & Functions of Canada Central Bank

As it can be noted from the onset, central banking and in that respect, the Canada Central bank “have been established prior to the twentieth century as an institution with monopoly rights, especially over money issuance and its flow in the economy, no doubt" (Gary Gordon, 2003, p. 181). Hence the central bank of Canada also can be placed in the bracket where it plays a major role in the monetary policy of the Canadian economy.

Moreover, “the original mandate of the bank of Canada and the preamble of the Bank Act 1934" (Handa, 2000, p. 254) clearly states the monetary norms and every central banking function. But what is more precise should be looked to the developments and, “as against the formal nature of interference by government in monetary policy, there case is different, and there is a continual consultation between government - that is to say, the finance department and between the Bank of Canada in the macro-economic and the policies in that regard." (Handa, 2000, p. 307)

Above all, from the analysis the case becomes clear and more precise, given that “the conduct of the monetary policies in Canada is solely under the jurisdiction and hands of the Bank of Canada, which mean that its core function is to implement monetary policies, and at the same time acting as the fiscal agent of the government of Canada." (Salvatore, 1991, p. 153). In addition, it also should be noted that “the bank of Canada policy is implemented on a national level, and its function gears for the needs and circumstances of the country as a whole" (Salvatore, 1991, p. 153) function.

Thus, commenting on the monetary policy and the function of Canada central bank, we come to the conclusion that like any other country central banking functionary the Bank of Canada and its functions overall also displays the same characteristics in matter of macro-economic and all the norms. But before we come to the final stages of the analysis part, it should not be forgotten to check with the recent developments in the bank of Canada that gave a shock to its economy, through its policies. The said developments are discussed as follows.


Recent Development in central bank that affected the economy in large scale

Since the inception of the central bank act way back in the early 1984, and then onwards, there have been many major developments and progress in the Canadian banking system. However, when it matter to Bank of Canada policies, and the effect it have on the economy, the recent development as reported in the media shows a clear picture “where it is being reported that the Canada unchanged interest rate policy which holds at a record low of 0.25% seems to have threaten in derailing the country recovery from the global economic crisis in the later part of 2009." (Gillies, 2009).

Further down the line and second issue in the league, the Canadian dollar in 2009 also fell drastically when compared against the US dollars in which case it was reported that “the central bank of Canada was showing an intention to hold the monetary rate at a record low" (Gillies, 2009) which showered the effect it have on the economy drastically or s to say, given the higher inflation rate and slow growth as reported in the media reports.

In the third case, from a close knit media report related to Canada Central Bank, it shows and relate the fact that the “central bank obsession with the inflation rate can act as a dampener in the country recovery, especially from the global economic recession in the early part of 2009" (CCPA, 2009), which also have tremendously effected the economy at larger, no doubt. As detailed in this reports, we conclude that the monetary policies followed by the Bank of Canada in the latter part of 2009 clearly define the dimension of the effects it have had on the economy, however; that have passed. But the manner in which they employed their monetary tools and polcies also automatically raises many questions, given the huge stake in it.


Conclusion

The results that have shown from analyzing the bank of Canada and its central function overall have added to the educational values. Hence, the analysis undertaken not only gave a clear picture of the monetary aspects, policies followed in the central institution, especially Bank of Canada, but also added to the greater elements of the banking management and its understanding, which offers a learning measure to the risky scenario. In that respect the risky nature of its functions also cannot be brushed aside, given that one wrong move can have a great impact and effect on the overall economy, especially when it matter to wrong measure in monetary policies.


Recommendation

It is further recommended that detailed research n the bank of Canada and the latest development also should be carried out. When it matter to monetary policies and its central banking functionary, everything seems fine. However, the state of worried list can be looked from the recent development that shook the economy, which also slowed down the recovery time in Canada.

Recommending on the same aspects, a clear and precise monetary policies calls for immediately, to facilitate a road to faster recovery. Thus, stakeholders and board of director need to take a close look to these developments, and take action accordingly or else the bank find itself in the same ditch.


Reference

  1. Age Bakker, I. R. (2007). Central bank reserve management: new trends, from liquidity to return. UK: Edward Elgar Publishing, 2007.
  2. BankofCanada. (1995-2010). who we are. Retrieved 1 11, 2010, from /www.bankofcanada.ca: http://www.bankofcanada.ca/en/about/history.html
  3. CCPA. (2009, 9 14). http://www.policyalternatives.ca. Retrieved 1 13, 2010, from Inflation-obsessed central bank could impede Canada's recovery: report: http://www.policyalternatives.ca/newsroom/news-releases/inflation-obsessed-central-bank-could-impede-canada%E2%80%99s-recovery-report
  4. Gary Gordon, L. H. (2003). Banking Panics and the Origination of Central Banking. In B. D. David Altig, Evolution and procedures in central banking (p. 181). New York: Cambridge University Press.
  5. Gillies, B. (2009, October 20). Canada's central bank leaves rate unchanged . Retrieved 1 13, 2010, from seattletimes.nwsource.com: http://seattletimes.nwsource.com/html/businesstechnology/2010099677_apcncanadainterestrates.html
  6. Handa, J. (2000). Monetary economics. London: Routledge.
  7. Salvatore, D. (1991). National economic policies. [Volume 1]. West Port, US: Greenwood Publishing Group.
  8. Siklos, P. L. (2003). Fianancial reforms in Canada: past present and future. In M. Hall, The international handbook on financial reform (pp. 51-70). UK: Edward Elgar Publishing.
  9. William Thomas Easterbrook, H. G. (1988). Canadian economic history. Canada: University of Toronto Press.
  10. Williamson, I. (1991). Your guide to arranging bank & debt financing for your own business in Canada. Toronto: Productive Publications.
  11. Xiang, H. (2009, 7 15). The structure of Central Banking and the Bank of Canada. Simon Fraser University, Canada/British Columbia. Retrieved from, http://www.sfu.ca/~hxiang/210/Slides/Central%20Bank.pdf
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