RSM230_Week 2_BofC_W2011

RSM230_Week 2_BofC_W2011 - RSM 230 Financial Markets Week 2...

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Unformatted text preview: RSM 230: Financial Markets Week 2 – The Bank of Canada January 17 & 20 Maureen Stapleton, CFA RSM 230 -2011 Week 2- Bank of Canada 1 For this week: • Readings: – Cleary Chapter 5 – Bank of Canada Fact Sheets; Bank of Canada & the CPA (Posted on Blackboard) – Supplementary: Mishkin Chapters 7-8 • Reminders: – Your fir st ar ticle & summar y will be due Januar y 30 at midnight – Must refer to material covered in NEXT week’s class (money market) – Group work – Please check your course outline for detailed requirements RSM 230 -2011 Week 2- Bank of Canada 2 You can read financial news online! • http://www.financialpost.com/news • Business - The Globe and Mail • Yahoo! Finance - Business Finance, Stock Market, Quotes, News • Yahoo! Canada Finance • Bloomberg - Business & Financial News, Breaking News Headlines • US Business News - Latest Headlines, Top Stories, Breaking News - W RSM 230 -2011 Week 2- Bank of Canada 3 RSM 230 -2011 Week 2- Bank of Canada 4 What are Central Banks? • Gover nment author ities in char ge of monetar y policy. – Actions affect inter est r ates, cr edit, the money supply, inflation etc • The Banker s’ Bank - M anages Centr al Payments System - Ser ves as “Lender of last r esor t” • Centr al banks ar ound the wor ld include: - Bank of Canada 1934 - Feder al Reser ve System in the US (12 member banks - distr icts) - Bank of England 1694 - Bank of Japan 1882 - - Eur opean Centr al Bank 5 RSM 230 -2011 Week 2- Bank of Canada Bank of Canada • Canada’s centr al bank • Founded in 1934 as a pr ivate company in 1938 it became a Cr own Cor por ation. • 12 dir ector s appointed by the gover nment for thr ee-year ter ms, and they appoint a gover nor (M ar k Car ney 2008) and senior deputy gover nor for seven-year ter ms. • The Deputy M inister of Finance sits on the committee but does not vote • The gover ning council of the bank deter mines policy • I n 1967, ultimate monetar y author ity was given to the gover nment. H owever , in the case of disagr eement with the Bank the M inister of Finance has to issue a public letter of dir ection which has never been done. 6 RSM 230 -2011 Week 2- Bank of Canada Bank of Canada Functions Source 2007 Annual report http://www.bankofcanada.ca/en/annual/2007/ar2007. html 7 RSM 230 -2011 Week 2- Bank of Canada 8 RSM 230 -2011 Week 2- Bank of Canada Bank of Canada I ncome Statement 9 RSM 230 -2011 Week 2- Bank of Canada M ajor Activities: 1: Note issue & Seignor age • Buys gover nment secur ities by issuing bank notes • Pays the Royal Canadian M int $0.12 for a $1 coin, which lasts almost for ever , • Pr ints $20 notes at a cost of $0.06, each one lasts on aver age two year s. I f the $20 is invested at 5% then over two year s the notes gener ates $2 in r evenue at a cost of 6 cents for $1.9 pr ofit....
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This note was uploaded on 05/17/2011 for the course RSM 230 taught by Professor Prof.maureen during the Spring '09 term at University of Toronto.

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RSM230_Week 2_BofC_W2011 - RSM 230 Financial Markets Week 2...

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