The Role and Functions of the Banking System in Canada Free Essay Example

Economics notes

Banking system: Financial institutions that receive deposits and loans are called depository institutions. ● Contract banks ● Credit unions ● Trust and mortgage companies Canada has a legal history that distinguishes banks from other banks. For many years, financial transactions have been similar to all depository institutions. They do business to make money. Contracted Banks: ● They are authorized in accordance with the 1992 Law to provide deposits and loans. Bank Liabilities: Deposits – the bank must repay your deposits Bank Assets: Loans Investments – Canadian Long-Term Bonds Canadian Government Bonds – Risk Free Assets Bank: Cash 4 A4 Treasury Bank deposits at Canadian banks Reserves include: 1 To meet cash needs 2.

Money deposited in Canadian banks is used to pay off debts with other banks. Business activities of financial intermediaries: 1. Earning income: they provide deposits and loans (financial intermediaries) 2. Reducing credit costs 3. Reducing risks; diversify loans Bank of Canada: is Canada’s central bank. ● Financial regulatory action ● Audit of other banks and financial institutions ● Last resort ● Banknote issuer Payment Coin: A system in which banks make payments to each other.

Payments are made by the Canadian Payments Association (CPA).