Question

1. III. Discuss Canada’s central bank – The Bank of Canada – in detail. Discuss all the features below
2. 1. The origins of the bank
3. 2. The formal structure of the bank
4. 3. The four main areas of responsibility
5. 4. The independence – make a case for and against independence of the bank
6. 5. What are the implications of the presence of the Bank of Canada with respect to the changing nature of the world today?

Answer 1

Ans-Firstly we understand about (1) origin of bank, before establishment of bank of Canada the bank of Montreal act as governmen, s bank.

In 1933,prime minister R. B Bennett Institute the Royal Commission of banking and report it's policy to establishment of a central bank for Canada.

In Royal Commission consist some member. Canadian former finance minister Williams Thomas white, Banque canadienne de Montreal general manager Beaudry Leman, and premier of Alberta John Edward Brownlee.

This bank was run by under the Bank of Canada act 3 July 1934.

2) Formal structure of Central Bank of the Canada

:In the bank total members include Board of directors, 15 member -governor, senior deputy governor ,deputy minister of finance, and 12 outside director.

All the member appoint for some period. Governor and senior deputy governor appointed for 7 year period . Minister of finance and outside director appoint for 3 year period.

This above member responsible for overall operation of the banks.

Governing member also responsible for monetry policy operation.

3) Canada central bank four main area of responsibility includes :monetary policy, currency, financial system and fund management. Use monetary action to mitigate fluctuations in the general level of production, trade and employment. It regulate credit and currency. The bank closely intracts with financial market.

The bank manager tax administration account to use for collecting and spending money for governments.

4) actually bank of Canada is owned by federal government, but with considerable independence to carry out it's responsibilities.

These below some point by which we understand independency.

a) The governor and senior deputy governor appointed by banks board of directors not by the federal government.

b) Bank employees are regulated by the bank itself not by federal government.

c) The bank submit it's expenditure to it's board of directors. And federal government submit their to treasury board.

And one more points,deputy minister of finance sits on the board of directors but has no any votes.

Some against points, it allowing the haedof central bank sit for predetermined amount of time and putting heavy restrictions on the head dismissal.

Appointment of head of central bank through a non political process.  

And giving the power of Central bank rather than government to set or execute monetary policy.

5) central bank of Canada very helpful for government, how to direct the economy, such as controlling inflation, economic growth and consequently prosperity.