What is the CAD (Canadian Dollar)
CAD is the currency abbreviation or currency symbol representing the Canadian dollar. The Canadian dollar is made up of 100 cents and is often presented as C$ to distinguish 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 currency 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. The development and distribution of bank notes to banks throughout Canada is the responsibility of the BOC. All Canadian coins have an image of the reigning British monarch on one side and varying designs on the other.
Canada stopped producing $1 bills in 1989, two years after it introduced the "loonie," which features a common loon on the front. Similarly, the mint ceased production of the $2 in 1996 with the release of the "toonie," the country's $2 coin. It features a polar bear on the front.
Canada stopped producing the penny in 2012 and fully discontinued them in 2013. The coin, however, still remains legal tender. Since taking it out of circulation, retailers round cash transactions to the nearest five cents. Non-cash transactions are still executed to the penny.
Polymer Canadian Dollars
The BoC released a new series of banknotes in an effort to fight counterfeiting and stopped printing paper currency. The Frontier Series — the seventh series for Canada — are made entirely out of polymer, a plastic substance that gives the currency added security features. The series was first introduced in June 2011; the $100 bill was the first to be put into circulation that same year. The remaining bills, the $50, $20, $10 and $5, were all released over the next two years. Some of the security features include raised ink, hidden images, metallic images — all of which are difficult to reproduce by counterfeiters.
Polymer bills have been in use since 1988 in Australia, which developed the technology in order to curb the problem with counterfeit notes circulating in the country's money supply. At least seven countries converted to polymer banknotes since 2014 including Australia, Canada, New Zealand and Vietnam.