Backgrounders
Brief articles explaining various topics related to the Bank of Canada's main functions:
Exchange Rates
1 May 2017 Calculation Methodology for Foreign Exchange Rates Published by the Bank of Canada
As previously announced, the Bank of Canada is changing the way it publishes foreign exchange (FX) rates, effective 1 March 2017. This document describes the selection criteria, calculation methodology and publishing process for the new exchange rates.29 May 2012 Intervention in the Foreign Exchange Market
Explains why intervention in the foreign exchange market might be considered and explains the mechanics of such intervention.24 May 2012 Exchange Rate
Outlines the factors that influence the exchange rate and explains the role of the exchange rate in monetary policy.Financial System
28 February 2014 Regulation of the Canadian Financial System
Describes the shared responsibility for the regulation of the Canadian financial system and summarizes the Bank of Canada’s role in the financial system.27 September 2013 Large Value Transfer System
Describes this important funds-transfer system and explains the Bank of Canada’s oversight role.29 May 2012 Canadian Financial System
Explains why a sound financial system is critical to a well-functioning economy and provides links to further information about Canada’s financial system.Household Debt
3 March 2014 Household Spending and Debt
Highlights the value of ‘prudent’ borrowing in enhancing welfare, but also the risks of over-indebtedness for households, the economy and financial stability. Discusses trends in household debt, various debt metrics and why monetary policy is concerned with how households use borrowed funds.Inflation & Prices
24 October 2016 Renewal of the Inflation-Control Target - Background Information – October 2016
Commentary and technical data relating to the 2016 target renewal.17 October 2013 Consumer Price Index
Explains this key indicator of inflation.31 May 2013 Inflation-Control Target
Explains Canada’s inflation-control target and its benefits.31 May 2013 Benefits of Low Inflation
Outlines the costs of high inflation and the benefits of low inflation.6 May 2013 Measurement Bias in the Canadian Consumer Price Index (CPI)
Describes possible sources of bias in the CPI, and explains why changes in this indicator may not always provide an accurate measure of actual changes in the cost of living.29 May 2012 Why has Canada's inflation target been set at 2 per cent?
Describes the potential problems that a higher or lower inflation target might entail.29 May 2012 Disinflation and Deflation
Defines these sometimes-confused terms and describes the monetary policy response to deflation.29 May 2012 Inflation and Price Stability
Defines inflation and price stability and describes their consequences as well as why the Bank aims to keep inflation low and stable.7 November 2011 Renewal of the Inflation-Control Target - Background Information - November 2011
Commentary and technical data relating to the 2011 target renewal.1 November 2006 Renewal of the Inflation-Control Target - Background Information
Commentary and technical data relating to the 2006 target renewal.Monetary Policy
24 October 2016 Renewal of the Inflation-Control Target - Background Information – October 2016
Commentary and technical data relating to the 2016 target renewal.15 January 2016 Target For The Overnight Rate
Defines this important policy interest rate and describes the role it plays in influencing various market interest rates.28 September 2012 Bank Rate
Explains what the Bank Rate is and its relationship to the target for the overnight rate.29 May 2012 Lending Rates
Outlines the factors that affect interest rates for commercial loans.29 May 2012 How Monetary Policy Works: The Transmission of Monetary Policy
Explains the process by which changes in the policy interest rate work their way through the economy and ultimately affect the rate of inflation.29 May 2012 Monetary Policy
Explains the purpose of monetary policy and describes how it works.7 November 2011 Renewal of the Inflation-Control Target - Background Information - November 2011
Commentary and technical data relating to the 2011 target renewal.1 November 2006 Renewal of the Inflation-Control Target - Background Information
Commentary and technical data relating to the 2006 target renewal.1 May 2001 Renewal of the Inflation-Control Target - Background Information
Commentary relating to the 2001 target renewal.Money
7 May 2014 What is E-Money?
Understanding and monitoring e-money products is an important part of the Bank of Canada’s research agenda.7 May 2014 Decentralized E-Money
Decentralized e-money is stored and flows through a peer-to-peer computer network that directly links users, much like chat rooms. No one user controls the network.29 April 2014 Demand for Cash
A core function of the Bank of Canada is to design, produce and distribute banknotes. Over the last few decades, there has been a major shift away from paper-based payment instruments, such as banknotes and cheques, toward electronic means of payment, such as debit cards, credit cards and innovations such as e-money.8 April 2013 Seigniorage
Defines seigniorage as the revenue earned from the issue of new money and explains it in the Canadian context.30 July 2012 What is Money?
Defines money, Outlines its main functions and explains why confidence in money is essential for it to serve those functions.29 May 2012 Canada's Money Supply
Describes the main measures of Canada’s money supply, explains how interest rates affect the growth of the supply of money and Explains why the Bank monitors this growth.Productivity
31 May 2013 Productivity
Defines this important economic concept, describes different measures of productivity, explains how productivity affects living standards, and summarizes the reasons behind Canada’s disappointing productivity record.29 May 2012 Output Gap
Defines this key economic indicator and explains its importance for monetary policy.
The Transmission of Monetary Policy - Whiteboard
This video describes, in general terms, the “transmission” of monetary policy-i.e., how changes in the Bank’s policy typically affect the economy and inflation over time.