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Canadian Financial System.docx

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Roopa Reddy

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Week 6: Economic Factors Canadian Financial System  Canadian financial system  Investment Instruments  Time value of money Learning Objectives  Canadian Financial System o Understand its purpose o Describe its structure and organization  Four pillars & Bank of Canada o Discuss changes in banking  International Banking & Finance o Understand purpose, structure and key organizations Canadian Financial System  Financial institutions facilitate flow of money o moving money from where there is a surplus of money to where there is a need  Four distinct legal areas/ “pillars”: o chartered banks  largest and most significant o alternate banks o life insurance companies o investment dealers  Lines between pillars have been blurred due to deregulation Pillar #1 – Chartered Banks  Privately owned, publicly traded, profit seeking  Largest and most important institution  Concentrated and highly regulated industry o Five largest account for 90% of total bank assets o Bank Act limits foreign-controlled banks to <8% of total domestic bank assets  Serve individuals, business, and others  Major source of short-term loans for business o Secured vs. unsecured loans  Expanded money supply through deposit expansion o when money is deposited in a bank, the bank can invest it else where o Or they loan it out to other
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