Monetary Policy
The Bank of Canada is Canada's central bank and is responsible for Canadian monetary policy, issuing bank notes, regulating and supporting Canada's principal systems for clearing and settling payments, and acting as fiscal agent for federal government debt. (See this video for more!)
Monetary policy is about money. The Bank of Canada is concerned with how much money circulates in our economy and how much that money is worth. The ultimate objective of the Bank of Canada, working through monetary policy, is to enhance the standard of living of Canadians.
Measuring Canada’s Money Supply
- Money consists of coins, bank notes and chequable deposits
- The Bank of Canada’s definitions of Money Supply (MS) include:
M1
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Currency (bank notes + coins) outside the banks + demand deposits (current chequing accounts)
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M2
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M1 + personal savings deposits + non-personal notice deposits
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M2+
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M2 + deposits at trust and mortgage loan companies, credit unions and caisses populaires
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M3
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M2 + non-personal fixed term deposits + foreign currency deposits of residents booked in Canada
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Resources
Monetary policy (definition)
Bank of England - monetary policy
Rates of Inflation for various nations
History of Money
Find out when – and why – people first started using money.
Phillips Curve: Inflation-Unemployment Trade-off
For an overview of the trade-off between unemployment and inflation in the short-run and the associated long-run consequences observe the following video.
