jul 3, 1934 - Bank of Canada Act (Political)

Description:

Who:
Bank of Canada

What:
The Bank of Canada was privately owned at first, but became nationalized by 1938. The Act changed the legal framework for Canada's banks. They were to maintain a specific ratio between public liabilities (current and savings accounts) and national monetary authority claims. The banks lost the right to borrow on demand from the government and had to borrow from the Bank of Canada. This would hold the main accounts of the Dominion and lend to it while also managing the national monetary system.

Where:
Canada

Why:
It was created in response to the 1933 Royal Commission of Banking and Currency.

How:
This happened by issuing paper currency, changing the interest rate at which it would lend to chartered banks, buying and selling bonds in the security markets, or by buying selling gold and foreign monies.

This was significant because the Bank of Canada administers the country's currency, protects the value of the currency, and acts as the government's and charter banks' official bankers. The Bank of Canada's most important purpose is to set monetary policies that will promote a balanced economy. This is why it was important for the Act to be passed, to ensure a balanced economy in Canada.

Added to timeline:

Date:

Images: