Learn about why the Bank of Canada was created and how it continues to promote the economic and financial welfare of Canadians.
Download the video transcript.
Discussion guide
After you’ve watched the video with your students, use this guide to explore key concepts, check for comprehension and lead a discussion.
Key concepts
- As its population grew and trade increased, Canada needed a central bank to encourage economic prosperity.
- The Bank of Canada was formed to standardize money production in Canada away from many different private banks.
- Central banks support national and international markets by researching and understanding how new technologies can impact financial systems.
Indigenous people had intricate trading networks throughout the continent long before European settlement. For examples of Indigenous trade objects, see our lesson plan Money: Past, Present and Future.
Comprehension check
Ask the following questions.
How did people trade in Canada before there was a common currency?
Before Canada introduced a common currency, people relied on bartering, or trading goods and services among themselves without using money.
What are some examples of the different money used in colonial and pre-Conferederation Canada?
Many different types of money were used before the founding of the Dominion of Canada in 1867. These included paper notes issued by colonial governments, trade tokens, and Spanish, French and British coins. The first banks in the colonies were not established until the early 1800s.
Who issued money when Canada was founded in 1867?
The Dominion government issued coins and paper money, but private banks also issued bank notes. Not long after the Bank of Canada was founded, it became the sole issuer of bank notes.
Why was the Bank of Canada created?
The Bank of Canada opened in 1935, largely as a response to the Great Depression. The collapse of the stock market and record unemployment at that time revealed the need for a central bank to help maintain Canada’s financial system.
What did the Bank of Canada create to help the war effort during the Second World War?
The Bank of Canada issued War Savings Certificates (nicknamed Victory Bonds) to help finance the war effort. These bonds paid a guaranteed interest rate to the purchaser when redeemed after the war. Effectively, they were loans made to the government by citizens. The program was so popular, it raised over $12 billion, the equivalent of $170 billion today!
What are the four roles of the Bank of Canada?
The four main roles of the Bank of Canada are:
- implementing monetary policy
- producing and issuing bank notes
- monitoring the financial system
- acting as the fiscal agent (the banker) for the Government of Canada.
What are some challenges the Bank has faced in the last few decades?
- researching how a more globalized and interconnected economy will affect Canada
- switching from paper to polymer bank notes to reduce counterfeiting
- better understanding digital currencies and how they might affect the economy
Group discussion
Ask the following questions.
- Why were so many different kinds of money used in colonial and pre-Confederation Canada?
- What might have been the risks of allowing commercial banks to issue their own bank notes in early Canada?
- What are ways people come together to fundraise and support projects today, like Canadians did with Victory Bonds during the war?
- What are some examples you can think of that show how Canada’s economy is connected to global markets?
- What might be some future challenges for Canada’s financial system, such as increasing technology?
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