logo image

Bank of Canada

The financial sector is on of the most critical and sensitive aspect in any economy. Money as a medium of exchange facilitates exchange of goods and services among other functions that keep the economy running. The players that ensure that money maintains its function as the generally acceptable medium of exchange, measure of value and unit of account are the central bank, the federal government, commercial banks and non banking financial institution.

This paper is an evaluation of the bank of Canada its structure and mode of operation, in an attempt to highlight effective management structures and designs that promotes autonomy thus making the bank effective and competent to carry out its function. (Bank of Canada, n.d.).

In the 1930’s the political and economical climate in the world had changed due to international trade, this trend had an impact on the political and economical climate in Canada since it did not have sufficient mechanism to carry out trade in the foreign market and maintain international accounts. In addition, the country was severely affected by the looming depression in this era and the government came under pressure as it did not have adequate avenues to deal with the depression. (Bank of Canada, n.d.)

The bank of Canada was started in 1935 after the Canadian financial sector being criticized of failing to adequately deal with the depression in the 1930’s and failure of financial institution in maintaining stability in the country and dealing with international trade. Today, the bank of Canada is the counties central bank with its headquarters in Wellington, Ottawa. The main principle of the bank is “to promote the economic and financial welfare of Canada”. The main goals of the bank is to ensure that they create a conducive environment that facilitates progressive economic activity, trade, investment and economic development in the country (Bank of Canada, n.d.).

The Bank of Canada was incorporated in 1934 as a privately owned company, in 1938, through a legislative act; the bank became a crowned corporation belonging to the federal government with the minister of finance holding the entire share capital therefore ultimately transforming the ownership to the people of Canada. The bank is not a government department but a completely independent institution. The structure enhances autonomy, transparency and accountability in the following ways (Bank of Canada, n.d.):

  • The bank is managed by the governor and his deputy who are appointed by the banks board of directors with approval from the cabinet. The Minister of finance sits on the board but does not vote to ensure autonomy.
  • The bank submits its returns and expenditure to the board while the federal government submits its returns to their treasury board.
  • The bank is audited by external auditors appointed by the cabinet on the recommendation of the minister of finance and not the government auditor general.
  • The bank employees are appointed and report to the bank itself and are not part of the government public service.

The main functions of the bank is to issue control and distribute the country’s currency, it is the governments banker, and offers effective funds management advice to the government and commercial banks. The bank being the authorised institution in printing and distribution of currency, has the responsibility to effect sound monetary policies that will ensure stability of the currency through maintaining low inflationary levels by regulating supply and controlling the level of interest rates in the economy that will ensure that investment is at a level that will stimulate growth in the country.

The decision making process on monetary policies and economic interventions are made by a consensus building. The governing council presents different alternatives which are discussed and through teamwork and discussion the counsel adopt the best solution based on the common views in relation to the desired economic path that should be undertaken by the country. In addition, the council prepares monetary reports updates that focus on the economic environment and key indicators such as inflation interest rates in the economy.

This follows up and continual monitoring of the economic performance enables the authority to identify economic malfunctions in time to implement corrective actions. After every deliberation and release of the reports, the council prepares a statement for the media on the governing council deliberation and answers any questions. This ensures transparency and facilitates communication between the public and the bank (Bank of Canada, n.d.)

One of the important elements that promote transparency, independence and effective management in the Bank of Canada as an autonomous institution is the introduction of corporate governing practises. For instance, In addition to the relevant financial statement publishing and being audited by external auditors. The bank produces a report every quarter that shows the governing council travel and hospitality expenditure.

Secondly, the bank publishes all contracts it has entered into that are worth over $100,000 three times a year. Given that this is the top decision making organ publishing of its expenditure and the contracts creates a control system since the public gets to audit their expenditure and review the contracts thus ensuring accountability and transparency (Bank of Canada, n.d.)

In conclusion, the bank of Canada decision making structure, mode of operation has ensured autonomy thus making the Bank competent and able to deal with the economic responsibilities bestowed on it by the Act. Secondly, the decision making process of consensus building and communication systems laid down by the bank ensures the best interest of the society is accommodated since after decision making the public is informed promptly and allowed to react through the media. Lastly, the incorporation of corporate governance practises will ensure that the bank is dynamic thus making it more competent, transparent and independent.

REFERENCE:

Bank of Canada, (n.d.). Corporate governance and management.

Need essay sample on "Bank of Canada"? We will write a custom essay sample specifically for you for only $ 13.90/page

Accessed 30th March 2008 from http://www.bankofcanada.ca/en/about/corp.html

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
|
Complete Buyer Protection
|
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy