balance of payments A bookkeeping system for recording all payments that have a direct bearing on the movement of funds between a country and foreign
balance-of-payments crisis A foreign exchange crisis stemming from problems in a country's balance of payments.
balance sheet A list of the assets and liabilities of a bank (or firm) that balances: Total assets equal total liabilities plus capital.
Bank Act Reform The legislation that took effect in October of 2001 regarding the policy framework of the Canadian financial services sector.
bank failure A situation in which a bank cannot satisfy its obligations to pay its depositors and other creditors and so goes out of business.
bank holding companies Companies that own one or more banks.
Bank of Canada (the Bank) Canada's central bank.
bank panic The simultaneous failure of many banks, as during a financial crisis.
bank rate The interest rate the Bank of Canada charges to members of the Canadian Payments Association.
bank supervision (prudential supervision) Overseeing who operates banks and how they are operated.
banker's risk The risk of not holding enough reserves to make immediate and larger than normal cash payments to liability holders.
banks Financial institutions that accept money deposits and make loans (such as commercial banks, savings and loan associations, and credit unions).
base money The sum of the Bank of Canada's monetary liabilities (notes outstanding and bank settlement balances) and coins outstanding. Also called monetary
Basel Accord An agreement adopted by more than 100 countries that requires banks to hold as capital at least 8% of their risk-weighted activities.
Basel Committee on Banking Supervision A committee of banking officials from industrialized nations that meets under the auspices of the Bank for International
Settlements in Basel, Switzerland to implement the Basel Accord.
basis point One one-hundredth of a percentage point.
bearer deposit notes CDs and GICs that can be traded and are in bearer form, meaning that whoever holds the instrument at maturity receives the principal and
behavioural finance The field of study that applies concepts from other social sciences, such as anthropology, sociology, and particularly psychology, to understand
the behaviour of securities prices.
Big Eight The big eight Canadian banks-Bank of Montreal, Canadian Western Bank, CIBC, Laurentian Bank, National Bank, RBC Financial Group, Scotiabank, and
TD Bank Financial Group.
Board of Directors of the Bank of Canada A board with fifteen members (including the governor) that is responsible for the management of the Bank.
Board of Governors of the Federal Reserve System A board with seven governors (including the chairman) that plays an essential role in decision making within
the Federal Reserve System.
bond A debt security that promises to make payments periodically for a specified period of time.
borrowed reserves The loans the central bank makes to deposit-based financial institutions.
Bretton Woods system The international monetary system in use from 1945 to 1971 in which exchange rates were fixed and the U.S. dollar was freely convertible
into gold (by foreign governments and central banks only).
brokered deposits Deposits that enable depositors to circumvent the $100 000 limit on federal deposit insurance by breaking up a large deposit into smaller
packages of less than $100 000 at each bank so that the total amount deposited is fully insured.
brokers Agents for investors who match buyers with sellers.
bubble A situation in which the price of an asset differs from its fundamental market value.