Lecture 15 - ECO100 - S2012

Of commercial banks at the bank of canada re cub dcb

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Unformatted text preview: ommercial banks + Deposits of commercial banks at the Bank of Canada RE = CUB + DCB CU © Gustavo Indart Slide 6 Bank of Canada Bank of Canada Canada’s central bank Controls and regulates financial institutions and markets Responsible for monetary policy for monetary policy Relatively independent from central government © Gustavo Indart Slide 7 Functions of the Bank of Canada Functions of the Bank of Canada Banker to the commercial banks Lender of last resort to commercial banks Banker to the federal government Controller and regulator of the money supply Regulator and supporter of money markets © Gustavo Indart Slide 8 Balance Sheet of the Bank of Canada Canada Assets Loans to commercial banks (LCB) Government Bonds (GB) Foreign-currency reserves Liabilities Deposits of the commercial banks (DCB) of the commercial banks Currency in circulation (CU = CUP + CUB) Deposits of the Government of Canada (DG) of the Government of Canada © Gustavo Indart Slide 9 Financial Intermediaries Financial Intermediaries Chartered or commercial banks or commercial banks Trust and mortgage loan companies Local credit unions and caisses populaires © Gustavo Indart Slide 10 Balance Sheet of a Commercial Ban Bank Assets Loans made to its customers (L) Deposits with the Bank of Canada (DCB) Government Bonds (GB) Currency in its vault (CUB) Liabilities Deposits of its customers (D) Deposits of the Government of Canada (DG) of the Government of Canada © Gustavo Indart Slide 11 Reserves of Commercial Banks Reserves of Commercial Banks RE = CUB + DCB CU CUB to meet customers’ needs DCB to settle accounts with other banks Target...
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