ADMS 1010 Chapter Notes -Louis Rasminsky, Hard Currency, Korean War
7 Apr 2014
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Case 7: the coyne affair" at the bank of canada. In the 1950"s, canada was emerging from the post-war, post-depression era. Economy was stable but the gdp/capita was low until 1960s. Within the first 18 months, raised the rate 6 times: soon the bank rate became a floating rate adjusted weekly. Coyne used the bank rate regularly in his effort to manage the money supply; wanted to keep inflation in check thus having a tight money policy: saw this as leading to growth and stability of consumer prices. Concerned about low saving rates of canadians and the high rate of foreign investment in. Canada; considered this linked: capitalist system requires savings, either you do the savings or you borrow from other countries who will do it for you. Introduced a minimum 15% liquidity ratio for charted bank holdings: designed to increase the effectiveness of monetary policy in moderating a too rapid expansion of credit.
