CAD (Canadian Dollar)

What is the 'CAD (Canadian Dollar)'

CAD is the currency abbreviation or currency symbol for the Canadian dollar. The Canadian dollar is made up of 100 cents and is often presented as C$ to distinguished it from other currencies denominated in dollars, such as the U.S. dollar. CAD is considered to be a benchmark currency, meaning that many central banks across the globe keep Canadian dollars as a reserve currency.

BREAKING DOWN 'CAD (Canadian Dollar)'

The Canadian dollar has been in use since 1858 when the Province of Canada replaced the Canadian pound with its first official Canadian coins. The Canadian dollar was pegged to the U.S. dollar at par using the gold standard system of one dollar equaling 23.22 grains of gold. In 1871, Canada's federal government passed the Uniform Currency Act, which replaced the various currencies of the provinces with the one national Canadian dollar. Throughout the country's history, the Canadian dollar has moved back and forth between being pegged to the U.S. dollar and being allowed to float freely. The Canadian dollar was first allowed to float in 1950; the currency was pegged again from 1962 to 1970 and has since been allowed to float.

Canadian Monetary Policy

Canada has an independent monetary policy. The Bank of Canada (BOC) is the entity responsible for overseeing the pursuit of the policy in ways that it feels is best suited to Canada’s economic circumstances and inflation targets. The BOC was founded in 1935, and its head office is in Ottawa, Canada's capital. The BOC is led by a governing council, the policy-making body of the bank, which is made up of a governor, a senior deputy governor and four deputy governors.

Canada's monetary policy, and the value of the Canadian dollar, are greatly influenced by global commodity prices. Natural resources are an important part of Canada's economy, and for that reason, its currency tends to fluctuate according to world commodity prices.

Minting of Canadian Dollars

Canadian dollars are minted at the Royal Canadian Mint located in Winnipeg in the province of Manitoba. All Canadian coins have an image of the reigning British monarch on one side and varying designs on the other. The one dollar coin features a common loon duck on the reverse and is commonly called a "loonie." The $2 coin features a polar bear and is known as a "toonie." The development and distribution of bank notes to banks throughout Canada is the responsibility of the BOC.