Economics 1022A/B Lecture Notes - Lecture 7: Quantitative Easing, Monetary Base, Aggregate Demand

• School: Western University
• Department: Economics
• Course: Economics 1022A/B
• Professor: Barry Tepperman

Document Summary

The bank of canada: canada"s central bank. Central banks: independent central bank, subordinate central bank. Determines monetary policy with no government interference. Must follow government directions, but still have significant power. The bank of canada: bank of canada balance sheet shows. Bank of canada"s functions: act as federal government"s fiscal agent. Design, production, distribution and destruction of bank notes: bank note issue, central banking services. Lends money to financial institutions at the bank rate. Payment orders (cheques, debit cards, automatic bill payments) are transmitted between financial institutions. Calculate the days gross and or net positions for each financial institution. Banks use funds on deposit with boc to fulfill obligations to other banks: same procedure also used for securities, derivatives, fx items. Boc and overnight loans: boc is ultimate source of liquid funds in payment system, lends money overnight to financial institutions unable to cover obligations on a given day. Provides economic analysis to assist in determining policy: monetary policy tools.