DEFINITION of 'Bank Of Canada - BOC'

The Bank of Canada was established in 1934 under the Bank of Canada Act. The Act stated the Bank of Canada was created “to promote the economic and financial welfare of Canada.” The Bank of Canada and its governor are responsible for issues such as setting monetary policies, printing money and determining the interest rate of Canadian banks.

BREAKING DOWN 'Bank Of Canada - BOC'

It was Canada’s Prime Minister William Lyon Mackenzie King who officially signed the Bank of Canada Act into law. In 1938, the Bank of Canada was legally designated as a federal crown corporation. Prior to the signing of the law, Canada’s largest bank, the Bank of Montreal, acted as the government’s banker.

The Bank of Canada governor resides over the Bank of Canada as the person responsible for many of the bank’s duties. The first governor, Graham F. Towers, served for 20 years. There is a term limit of seven years for the Bank of Canada’s governor. The election is made by the board of directors. Governor Stephen Poloz has served since 2013 and is the bank’s ninth governor. The members of the board of directors are appointed by Canada's Minister of Finance for three-year terms.

The Bank of Canada and the governor are responsible for items like setting monetary policies, printing money and determining the interest rate of Canadian banks. Setting the interest rate is one of the most important roles of the bank. The interest rate is decide eight times a year. Back in 2007, the interest rate stood above 4% before being lowered over time to the 1% mark in 2010. The rate was cut twice in 2015 to the current 0.5% level. This rate is the interest charged when banks lend money to each other. Rate cuts are typically done to boost the economy.

Creating the national currency for Canada is another important task of the Bank of Canada. The governor works on making money that is difficult to be counterfeited and has an authentication process in place. Canada contracts the printing of money to an outside printing company. The governor’s name can be found as a printed signature on all Canadian paper money.

The Bank of Canada can be found at 234 Wellington Street in the city of Ottawa. This is where the bank has operated since 1980, its final of several building moves. Regional Bank of Canada offices are also present in Vancouver, Calgary, Toronto, Montreal, and Halifax.

RELATED TERMS
  1. Big Six Banks

    A term used in Canada to describe the National Bank of Canada, ...
  2. Big Five Banks

    A reference used in Canada to describe Royal Bank, The Bank of ...
  3. Investment Canada Act - ICA

    A piece of legislation designed to provide for the review of ...
  4. Sale and Repurchase Agreement - ...

    An open market operation, implemented by the central Bank of ...
  5. CAD (Canadian Dollar)

    The currency abbreviation or currency symbol for the Canadian ...
  6. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. ...
Related Articles
  1. Trading

    The Canadian Dollar: What Every Forex Trader Needs To Know

    Canada is becoming an increasingly viable alternative to the U.S. dollar, making it more important in the forex market.
  2. Investing

    3 Reasons Canada's Economy Matters in 2016

    Discover why Canada's 2015 recession matters and why the United States is particularly dependent on a healthy Canadian economy.
  3. Investing

    Why Bank Stocks May Keep Printing Money (BAC, C)

    Bank stocks could enjoy strong returns in 2017 according to a report published by Royal Bank of Canada.
  4. Financial Advisor

    Is Now the Right Time to Buy Canadian Stocks?

    Learn about the Canadian stock market and why it has declined over the past five years. Understand if now is a good time to invest in Canadian stocks.
  5. Investing

    The United States Vs. Canada - Differences In Investing

    While there are certainly some differences, American and Canadian investors have more in common than not.
  6. Investing

    Get To Know The Major Central Banks

    The policies of these banks affect the currency market like nothing else. See what makes them tick.
  7. Personal Finance

    3 Reasons to Attend College in Canada

    Attending college in Europe might be the dream, but with low tuition fees and weakening currency, Canada is the financially responsible choice.
  8. Personal Finance

    Retail Banking vs. Corporate Banking

    Retail banking is the visible face of banking to the general public. Corporate banking refers to the aspect of banking that deals with corporate customers.
  9. Insights

    So You Want to Move to Canada? Good Luck

    The prospect of a Donald Trump presidency had many blue staters eyeing a move to America's northern neighbor late on election day.
  10. Investing

    How And Why Oil Impacts The Canadian Dollar

    The value of the Canadian dollar, or the loonie, has a strong correlation with oil prices.
RELATED FAQS
  1. How does investing in the banking sector differ between the U.S. and Canada?

    Discover why some investors prefer Canadian to U.S. banks. Learn how trades of Canadian bank shares are executed in both ... Read Answer >>
  2. What are the most common market indicators to follow the Canadian stock market & ...

    Learn key indicators used by analysts to follow the Canadian stock market and to gauge the condition of the overall Canadian ... Read Answer >>
  3. What economic indicators are important to consider when investing in the banking ...

    Find out which economic indicators are most useful for investors in the banking sector, especially those influenced by central ... Read Answer >>
Hot Definitions
  1. Trustee

    A person or firm that holds or administers property or assets for the benefit of a third party. A trustee may be appointed ...
  2. Gross Domestic Product - GDP

    GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
  3. Debt/Equity Ratio

    The D/E ratio indicates how much debt a company is using to finance its assets relative to the value of shareholders’ equity.
  4. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
  5. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  6. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
Trading Center