Banking in canada
Because of Canada’s close historical relationship with the United States and the United Kingdom, development of the Canadian banking system has been influenced by both countries. Unlike the United States, however, Canada always had a branch-banking system. Until 1994 banks in the United States were restricted to opening branches only in the city or state where they were incorporated. One of the first laws passed by Canada’s Parliament after confederation, in 1867, allowed any Canadian-chartered bank to operate in any part of the dominion. This law encouraged the growth of Canada’s branch-banking system, in which a few large banks operate all the country’s banking offices. In 2000 there were only 13 domestic banks in Canada, and the six largest controlled more than 90 percent of all bank assets in Canada. The remaining seven domestic banks accounted for about 2 percent of bank assets, and foreign banks accounted for about 7 percent of bank assets.
The largest commercial banks of Canada operate extensively in foreign countries, particularly in the West Indies, Asia, and the United States. In addition to the usual business of commercial loans, Canadian banks operating in foreign countries have specialized in investment banking and wealth-management activities.
The regulator of federally chartered Canadian banks and financial institutions is the Office of the Superintendent of Financial Institutions (OSFI), which was established in 1987. Since 1967 deposit insurance has been provided by the Canada Deposit Insurance Corporation (CBIC), which insures up to $60,000 Canadian per depositor per institution. Both the OSFI and the CBIC are Crown Corporations owned by the government.
The central bank of Canada is the Bank of Canada. Created in 1935, it is owned by the Ministry of Finance and is responsible for Canadian monetary policy. Unlike the U.S. Federal Reserve, the Bank of Canada is also responsible for issuing and managing the national debt. In the United States, this function is performed by the Department of the Treasury. The primary policy group of the Bank of Canada is called the Governing Council. This group consists of the governor of the Bank of Canada, the senior deputy governor, and four deputy governors. The Bank of Canada is less independent of the government than is the U.S. Federal Reserve because it must consult with the minister of finance on policy matters.
The largest commercial banks of Canada operate extensively in foreign countries, particularly in the West Indies, Asia, and the United States. In addition to the usual business of commercial loans, Canadian banks operating in foreign countries have specialized in investment banking and wealth-management activities.
The regulator of federally chartered Canadian banks and financial institutions is the Office of the Superintendent of Financial Institutions (OSFI), which was established in 1987. Since 1967 deposit insurance has been provided by the Canada Deposit Insurance Corporation (CBIC), which insures up to $60,000 Canadian per depositor per institution. Both the OSFI and the CBIC are Crown Corporations owned by the government.
The central bank of Canada is the Bank of Canada. Created in 1935, it is owned by the Ministry of Finance and is responsible for Canadian monetary policy. Unlike the U.S. Federal Reserve, the Bank of Canada is also responsible for issuing and managing the national debt. In the United States, this function is performed by the Department of the Treasury. The primary policy group of the Bank of Canada is called the Governing Council. This group consists of the governor of the Bank of Canada, the senior deputy governor, and four deputy governors. The Bank of Canada is less independent of the government than is the U.S. Federal Reserve because it must consult with the minister of finance on policy matters.