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York University
Administrative Studies
ADMS 1010
Alex Browning

Class 2 Origins of financial stability in Canada; the bank act of 1871 - The enormous growth in global trade and investment also required the expansion of government oversight and international cooperation on financial governance. - Extraordinary and unprecedented steps have been required by governments across the world to rescue their banks from default. - Canadian banks were seen as more stable than the rest of the world, largely due to the way the very origins of banking law and regulations were set in the 19 century. - The political goal was financial stability and the managerial challenge was to create the institutions and regulatory framework to carry it out. Origins of financial stability in Canada; the bank act of 1871 - There was deterioration in the American banking system. The four provinces then agreed that they should have a national currency and a national banking system. They also needed to establish public confidence in the financial system in order to have economic prosperity. Foundations of banking and currency in Canada together with proposals for a bank act for the dominion of Canada Banking in early Canada; -There was no financial system in Canada before passing the powers from France to Brittan from 1759 to 1763. Family’s kept their savings in ‘specie’ (which were gold and silver coins). Even when the British took over from 1759, they had no interest in working out finance and money issues. A reliable form of money, either for means of payment or to store value, or to even help governments with their own finances did not exist. People in different areas used to hold different currencies from different countries. In upper Canada, people used to have a York currency. -The shortage of specie led to various improvisations of paper money. Merchants in Quebec issued small promissory notes, British army used its own paper money. - Merchants had great difficulty in financing their exports of flour, potash, lumber and fur, while also facing trouble importing clothes, sugar, salt and farming tools. First bank of the United States; -US was facing the same problems as Canada, this also was a huge problem for Canada since the states was a major trading partner. In 1791, the first bank of the US open in Philadelphia. Before that, the US constitutions specifically assign the power to issue and regulate coinage to the federal government and defined gold and silver as the only legal tenders. The bank was modelled on the bank of
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