Legislative Overview (15 Marks) Please discuss 2 important institutions in Canad

Question

Legislative Overview (15 Marks)

Please discuss 2 important institutions in Canada responsible for conducting fiscal and monetary policy, name the Department of Finance and the Bank of Canada. What are the roles of each and what are each responsible for obtaining? What are the responsibilities of each institution and what tools do they have at their disposable to impact the economy? Can you say that their objections are in tandem with one another or due they sometimes conflict? Please explain.

Monetary policy is conducted by the Bank of Canada, which is a government-owned Crown corporation that operates with considerable independence from the federal government but it nonetheless ultimately accountable to Parliament.

Because financial capital can move easily within Canada, interest rates on similar assets are the same across all Canadian regions. As a result, there is only one monetary policy for all of Canada. The Bank of Canada is the sole issuer of legal tender (bank notes) in Canada.

Although several economic variables influence monetary policy decisions, the Bank of Canada has only one policy instrument.

Explanation / Answer

The Bank of Canada is the central bank which manages the monetary position as well as the overall financial system of the country.

Following are the main functions of the bank:

The monetary policy managed by the bank looks after the following critical areas and the instruments that are leveraged to manage it:

The Bank of Canada also manages the country’s financial systems and institutions such as banks, insurance agencies, and other financial agents. It is central bank’s policy to manage the credit and debt growth and interest rates offered to the banks.

The third important function executed by the bank is regulation of the currency such as printing of notes and also to maintain the exchange rate within limits and as per norms.

The Department of Finance has following responsibilities:

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