资本市场和金融机构3.pptVIP

Bank of Canada (Based on Ch 6, Mishkin et al.) 6.1 Central banks and their importance 6.2 Functions of Bank of Canada 6.3 Independence of Bank of Canada 6.4 Structure of the Bank of Canada 6.5 Other Central banks 6.6 Conclusions 6.1 Central Banks Government authorities in charge of the monetary policy (Management of interest rates and money supply) Importance of Central Banks Amount of credit Money supply Interest rates Lender of last resort [An important reason for having a central bank is the need for a lender of last resort to prevent systemic financial crises. Banks are more prone to crises than other businesses because their assets are largely long-term, whereas their liabilities (deposits) can be withdrawn on demand.] ? Effect in expected inflation rate, on foreign exchange rate, expected economic growth rate; in general, in the overall economy. Example: The Bank of Canada decreased the target for the overnight interest rate from 2.75% to 2.5% (20Jan2004), then to 2.25% (March 2, 2004), and 2% on Apr13, 2004. It increased to 2.5% on May 13, 2005, 3.5% on Jan 24, 2006. Currently is 0.25% (May 7, 2009). Should bank of Canada leave interest rates alone? [Do we need central banks?] Reason why BofC sets a target overnight interest rate “In choosing a Target for the Overnight Rate, the Bank of Canada picks a level that it feels will keep future inflation low, stable and predictable. Keeping inflation low and stable helps provide a good climate for sustainable economic growth, investment and job creation” [Source: www.bankofcanada.ca ] 6.2 Functions of the Bank of Canada 1. Bank Note Issuer Only provider of paper money 2. Government Debt and Asset Management Service Administration of government debt , such as the payment of interest and principal. Administration of foreign currency reserves Intervention in the FX markets 3. Central Banking Services Lender of last resort? to prevent bank runs and panics Supervises Canada’s national paymen