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Today's topic is Bank of Canada and Financial institutions; the materials are covered through websites, videos, and images.

Bank of Canada short of BoC is Canada's central bank. The main role of BoC is "to promote the economic and financial welfare of Canada,".
Financial Institutions or Financial Intermediaries such as banks, insurance companies, mutual funds, finance companies channels funds from savers to borrowers for productive use in order to grow the economy.

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BoC is Canada's central bank. As I point out in my welcome post; the main role of BoC is "to promote the economic and financial welfare of Canada,". To do so, the Bank regulates the money supply and acts to stabilize the Canadian economy by using monetary policy to keep inflation low and stable.

I chose this Website because of its credibility. The link is taken straight from Canada’s Central Bank which removes any doubts, confusion and gives the reader a peace of mind. Moreover, the information is not  only accurate but I also found more information regarding BoC is responsibility compare to other websites.

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Separate from the Political Process

The Bank of Canada is a special type of Crown corporation, owned by the federal government, but with considerable independence to carry out its responsibilities. For example:

The Governor and Senior Deputy Governor are appointed by the Bank's Board of Directors (with the approval of Cabinet), not by the federal government.

The Deputy Minister of Finance sits on the Board of Directors but has no vote.

The Bank submits its expenditures to its Board of Directors. Federal government departments submit theirs to the Treasury Board.

Bank employees are regulated by the Bank itself, not by federal public service agencies.

The Bank's books are audited by external auditors appointed by Cabinet on the recommendation of the Minister of Finance, not by the Auditor General of Canada.

Having an independent monetary institution allows for the separation of the power to spend money from the power to create money. Separating the central bank from the political process enables it to adopt the medium- and long-term perspectives essential to conducting effective monetary policy.

The Bank is committed to publishing information about how it works.

Reports, statements, public surveys and plans are available in the governance documents section.

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The Bank of Canada is a special type of Crown corporation, owned by the federal government, but with considerable independence to carry out its responsibilities. For example: The Governor and Senior Deputy Governor are appointed by the Bank's Board of Directors (with the approval of Cabinet), not by the federal government.

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Other responsibility of BoC is to regulate Monetary policy, Financial system, Currency, and Funds management. Monetary policy is the main tool that BoC have that directly affects the economy; their goal is to keep inflation low and stable through use of Monetary policy.  Monetary policy has two elements in it; first Money supply, and secondly the interest rate. Financial system: Bank of Canada regulates and promotes safe and efficient financial systems within Canada and abroad. BoC is also responsible for currency designs, printing, and distribution of the currency. And finally Funds Management: manages government account, public debt and finances government debt.

The reason why I chose this website is because of its trustworthiness. Investopedia is one of the well-known financial dictionary that has educational content and it primarily focuses on investing. I found very interesting about this website is it’s content is organized very well compare to other websites I have been using it through out high school and College.

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What is the 'Bank Of Canada - BOC'?

The Bank of Canada (BOC) was established in 1934 under the Bank of Canada Act. The Act stated that the Bank of Canada was created "to promote the economic and financial welfare of Canada." The BOC and its Governor are responsible for setting monetary policies, printing money and determining the interest rate of Canadian banks.

BREAKING DOWN 'Bank Of Canada - BOC'

The BOC has four main areas of responsibility: monetary policy, which dictates the supply of money circulating in the Canadian economy; currency, the design and issuing of Canada's bank notes, and managing funds. The BOC manages the Canadian government's public debt and reserves of foreign exchange.

Canada's former Prime Minister, William Lyon Mackenzie King, officially signed the Bank of Canada Act into law. In 1938, the BOC was legally designated as a federal crown corporation. Prior to the signing of the law, Canada's largest bank, the Bank of Montreal, acted as the government's banker.

The BOC Governor is responsible for many of the bank's functions. The first Governor, Graham F. Towers, served for 20 years. The BOC Governor serves for a seven-year term and is elected by the board of directors. Governor Stephen Poloz has served since 2013 and is the bank's ninth Governor. The members of the board of directors are appointed by Canada's Minister of Finance and serve for three-year terms.

The BOC and the Interest Rate

Setting the interest rate is one of the most important roles of the BOC. Canada's monetary policy framework is designed to keep inflation low and stable. The interest rate is decided eight times a year. In 2007, the interest rate was above 4% before being lowered, over time, to 1% in 2010. The rate was cut twice in 2015 to the current 0.5% level. This rate is the interest charged when banks lend money to each other. Rate cuts are typically imposed to boost the economy.

Other Functions of the BOC

Creating the national currency for Canada is another important task of the BOC. The Governor's responsibility is to provide money that is difficult to counterfeit and that has an authentication process in place. Canada contracts the printing of money to an outside printing company. The Governor's printed signature appears all Canadian paper money.

The BOC's headquarters are 234 Wellington Street in the city of Ottawa. This is where the bank has operated since 1980 after several relocations. Regional Bank of Canada offices are located in Vancouver, Calgary, Toronto, Montreal and Halifax.

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The Bank of Canada (BOC) was established in 1934 under the Bank of Canada Act. The Act stated that the Bank of Canada was created "to promote the economic and financial welfare of Canada." The BOC and its Governor are responsible for setting monetary policies, printing money and determining the interest rate of Canadian banks.

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My first two websites focused on the Bank of Canada and I want to discuss the other two websites on Financial Institutions.

In Financial market funds are transferred from people who have extra funds (savers) to people who need funds (borrowers). The actual transfer of money happens in the Financial Institutions. Therefore, Financial Institutions plays an important role to the growth of our economy.  Without them, government, businesses, and investors would have had hard time to accumulate funds and expand their operation.

I like the website because of its credibility. I know I have mentioned credibility more than twice but I have to admit that credibility is everything to me and I valued greatly. So, don’t be surprised to hear the word over and over again. The other reason why I like this website is because of its well design content and its very easy to understand and read the text.

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What Is a Financial Institution (FI)?

A financial institution (FI) is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange. Financial institutions include a broad range of business operations within the financial services sector, including banks, insurance companies, brokerage firms, and investment dealers.

Virtually everyone living in a developed economy has an ongoing or at least periodic need for a financial institution's services.

Key Takeaways

Understanding Financial Institutions (FIs)

Financial institutions often match savers' or investors' funds with those seeking funds, such as borrowers or businesses seeking to trade shares of ownership for funds. Typically, this leads to future payments from the borrower or business to the saver or investor. The tools for matching all of these parties up include products such as loans, and markets, such as a stock exchange.

At the most basic level, financial institutions allow people to access the money they need. For example, although banks do many things, their primary role is to take in funds-called deposits-from those with money, pool the deposits, and lend the money to others who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (who the bank lends money to).

This works well because while some depositors need their money at any given moment, most do not. So banks can use deposits to make long-term loans. This applies to almost every entity and individual in a capitalist system: individuals and households, financial and nonfinancial firms, and national and local governments.

Financial institutions serve most people in some way as a critical part of any economy-whether in banking, insurance, or securities markets. Individuals and companies rely on financial institutions for transactions and investing. For example, the health of a nation's banking system is a linchpin of economic stability. Loss of confidence in a financial institution can easily lead to a bank run.

The Function of Financial Institutions in Capital Markets

Capital markets are important for functioning capitalist economies because they channel savings and investments between suppliers and those in need. Suppliers are people or institutions with capital to lend or invest. Suppliers typically include banks and investors. Those seeking capital are businesses, governments, and individuals.

Financial institutions play an important role in capital markets, directing capital to where it is most useful. For example, a bank takes in deposits from customers and lends the money to borrowers, ensuring capital markets' efficient function.

Regulation

Governments oversee and regulate banks and financial institutions because the institutions play an integral economic role. Bankruptcies of financial institutions, for instance, can create panic. Federal and state agencies can regulate financial institutions. Sometimes, multiple agencies regulate the same institution.

Federal Depository Regulators

Federal depository regulators oversee commercial banks, thrifts (savings associations), and credit unions accepting customer deposits.

U.S. Federal Reserve (The Fed): Regulator of Federal Reserve System member state banks, foreign banking organizations operating in the United States, and financial holding companies.

Office of the Comptroller of the Currency (OCC): The OCC is responsible for seeing that national banks and federal savings associations operate safely, provide equal access to financial services, treat customers fairly, and comply with applicable laws and regulations. It also regulates U.S. federal branches of foreign banks and federally chartered thrift institutions.

Federal Deposit Insurance Corporation (FDIC): The FDIC regulates federally insured depository institutions, state banks that aren't members of the Federal Reserve System, and state-chartered thrift institutions.

National Credit Union Administration (NCUA): NCUA supervises and insures federally chartered or insured credit unions.

Federal Securities Markets Regulators

Two federal institutions regulate products, markets, and market participants for securities such as stocks, bonds, and derivatives.

Securities and Exchange Commission (SEC): The SEC regulates securities exchanges, broker-dealers, and corporations selling securities to the public; investment funds, including mutual funds; investment advisers, including hedge funds with assets over $150 million; and investment companies.

Commodities Futures Trading Commission (CFTC): The CFTC regulates futures exchanges, futures commission merchants, commodity pool operators, commodity trading advisors, derivatives, clearing organizations, and designated contract markets.

Government-Sponsored Enterprise (GSE) Regulators

These dedicated regulators exclusively oversee government-sponsored enterprises, which are quasi-governmental entities established to enhance the flow of credit to specific sectors of the U.S. economy.

Federal Housing Finance Agency: The FHFA supervises, regulates, and performs oversight of the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Bank System.

Farm Credit Administration: This agency regulates Farm Credit System institutions and Farmer Mac, credit sources for eligible persons in agriculture and rural America.

Consumer Protection Regulator

Currently, the Consumer Financial Protection Bureau (CFPB) is the only national consumer entity tasked with exclusively regulating consumer products. CFPB's purview includes nonbank mortgage-related firms, private student lenders, payday lenders, and other large "consumer financial entities," as determined by the CFPB. CFPB is the rulemaking consumer protection authority for all banks and has supervisory authority for banks with more than $10 billion in assets.

State Regulators

States may regulate financial institutions in addition to or instead of federal regulators. For example, there is minimal federal oversight of the insurance industry. Each state government has a department that licenses and regulates insurance companies and any company selling insurance products. States may also regulate banking, securities, and consumer protections in addition to federal regulators who work in those areas.

Types of Financial Institutions

Financial institutions offer various products and services for individual and commercial clients. The specific services offered vary widely between different types of financial institutions. Here are some of the types consumers are most likely to use:

Banks, Credit Unions, and Savings & Loans

These financial institutions accept deposits and offers checking and savings account services; make business, personal, and mortgage loans; and provides basic financial products like certificates of deposit (CDs). They may also act as payment agents via credit cards, wire transfers, and currency exchange.

These types of financial institution can include:

Commercial or private banks

Savings and loans associations

Credit unions

Foreign banks

Savings banks, industrial institutions, thrifts

Investment Companies, Advisors, and Brokers

Investment companies issue and invest in securities (stocks, bonds, mutual funds and ETFs or exchange-traded funds). Mutual funds are one example of a product offered by an investment company, where many investors' money is pooled and invested in stocks, bonds, money market instruments, other securities, or even cash in an ongoing manner.

Other examples of investment-related financial institutions include investment advisors and brokers. Brokers accept and carry out orders to buy and sell investments (such as securities) for customers.

Insurance Companies

Among the most familiar non-bank financial institutions are insurance companies. Providing insurance for individuals or corporations is one of the oldest financial services. Protection of assets and protection against financial risk, secured through insurance products, is an essential service that facilitates individual and corporate investments that fuel economic growth.

Insurance is primarily regulated at the state level, but the U.S. Treasury's Federal Insurance Office (FIO) does monitor the industry and plays an advisory role.

Why Are Financial Institutions Important?

Financial institutions are essential because they provide a marketplace for money and assets so that capital can be efficiently allocated to where it is most useful. For example, a bank takes in customer deposits and lends the money to borrowers. Without the bank as an intermediary, any individual is unlikely to find a qualified borrower or know how to service the loan. Via the bank, the depositor can earn interest as a result. Likewise, investment banks find investors to market a company's shares or bonds to.

What Are the Different Types of Financial Institutions?

The most common types of financial institutions include banks, credit unions, insurance companies, and investment companies. These entities offer various products and services for individual and commercial clients, such as deposits, loans, investments, and currency exchange.

Which Agency Oversees Banking Operations in the United States?

Several agencies oversee banking operations in the U.S., including the Federal Reserve, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA).

What's the Difference Between a Commercial and Investment Bank?

A commercial bank, where most people do their banking, is a type of financial institution that accepts deposits, offers checking account services, makes business, personal, and mortgage loans, and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses.
Investment banks specialize in providing services designed to facilitate business operations. This might include raising money through financing and equity offerings, including initial public offerings (IPOs). They also commonly offer brokerage services for investors, act as market makers for trading exchanges, and manage mergers, acquisitions, and other corporate restructurings.

Which Agency Regulates Investment Banking Firms?

The Securities and Exchange Commission (SEC) oversees the operations of investment banks as these banks deal with securities.

The Bottom Line

Financial institutions help keep capitalist economies running by matching people who need funds with those who can lend or invest it. They offer a wide range of business operations within the financial services sector including banks, credit unions, insurance companies, and brokerage firms. Regulatory agencies such as the OCC, the SEC, the FDIC, and the Federal Reserve oversee the operations of financial institutions in the United States.

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A financial institution (FI) is a company that focuses on dealing with financial transactions, such as investments, loans, and deposits.

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In Canada there are three type of Financial Institutions; Depository institutions (banks), contractual savings institutions, and investment intermediaries. Depository institution includes Chartered banks, Trust and loan companies and Credit Union and Caisses poplaires. Contractual Savings Institutions includes Life insurance companies, Property and casualty insurance companies, and pension funds. Investment Intermediaries are Finance companies, Mutual funds, Money market mutual funds.

I like the website because it was easy to find information and the wording of the text wasn’t too confusion. The one thing I really like about the website was it simplicity of the text and very detailed orientated.

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Financial institutions provide financial services to their clients and they are highly regulated by the government. Essentially, financial institutions help their clients facilitate the flow of money through the economy. Generally speaking, there are three types of financial institutions in Canada: deposit-taking institutions, insurance companies, and investment institutions.

Deposit-taking institutions

Deposit-taking institutions include banks, credit unions, trust companies, mortgage loan companies and building societies. Deposit-taking institutions refer to any entity that accepts deposits as an ordinary course of business. They act as an intermediary for their clients by accepting and managing deposits as well as making loans. Most banks only hold a small reserve of the funds deposited and lend out the rest in order to make a profit. This is called fractional reserve banking.

Insurance companies

Insurance companies sell insurance against the risk of loss (which can be due to various factors, such a property damage, death, job loss etc.). The insured party makes payments, called premiums, to the insurance company and in exchange the insurance company promises to compensate the insured in the case of loss covered by the insurance policy.

In addition, specified insurance companies are insurance companies that issue (or is obligated to make payments with respect to) cash value insurance contracts or annuity contracts.

Investment institutions

Generally, the main business of an investment institution involves investing, administering or managing funds or money on behalf of other persons. Investment institutions include investment banks, underwriters and brokerage firms. These institutions assist their clients in raising capital by acting as agent and/or the underwriter in the issuance of securities, such as stocks and bonds.

The functions of the various financial institutions can overlap, such as banks offering mortgage insurance and insurance companies offering an investment component to their life insurance policies.

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Types of financial Institutions - Legal Line

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Financial institutions provide financial services to their clients and they are highly regulated by the government. Essentially, financial institutions help their clients facilitate the flow of money through the economy. Generally speaking, there are three types of financial institutions in Canada: deposit-taking institutions, insurance companies, and investment institutions.

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The main objective of the Bank of Canada is to maintain value of Canadian dollar. To do so, Bank of Canada keeps inflation low, stable and predictable. This increases Canadian’s confidence in their value of money or purchasing power. As a result, savers continue to save without worrying they dollar worth less tomorrow. The Bank of Canada has a target of 2% inflation rate. They also oversee all the financial institution in order to protect capital Market and maintain the confidence of the investors.

I like the video because of its clarity on the topic. Moreover, Its credibility; the video was made and published by bank of Canada. I like it over the other videos because it was well explained and detailed.

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In plain language, then Governor Mark Carney and eight Bank staffers describe how this complex institution promotes the economic welfare of all Canadians.

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The bank of Canada has four main responsibilities; Monetary policy, Financial system, Funds management and finally Currency. This video focuses on issue of Currency; Bank of Canada is responsible for the design, printing, and delivery of Canada’s bank Notes. The new polymer Bank notes are very durable. It has been tested on various temperatures from hot to cold, twisted and stretched to measure its durability.

I like the video because of its simplicity on the topic. Moreover, its credibility; the video was made and published by bank of Canada. I like it over the other videos because it was well explained and detailed.

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Canada's New Polymer Bank Notes—Made to Last

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In Canada there are three type of Financial Institutions; Depository institutions (banks), contractual savings institutions, and investment intermediaries. This video focuses on Depository Institution such as chartered banks; Schedule I: Schedule I chartered banks are domestic banks that accepts deposit and makes loan to individuals like mortgages, car loan etc., also issues loan to the government, and businesses. The bank has verity of services and products such as saving account, chequing account, different types of mortgages etc.

I chose this video because it had graphic in it. It was very easy to understand and well articulated. I like this video over other videos I seen because it has graphic which made it more interesting to listen.

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This video gives a brief introduction of Financial Institution, almost everything that I mentioned on the websites column from one to four. It starts off with how individuals making transactions everyday, and making deposits to save money or withdraw to spend money. Bank lends out the deposited money to the other investors for productive use in the economy and gives interest to the consumer for the deposit they made. It goes on to explaining the types of Financial Institutions, such as Depository Institutions (banks), Contractual Savings Institutions, and Investment Intermediaries.

I like the video because it was very interesting and the publisher made a great job of organizing the content in short video which is very difficult to in order to cover everything. Moreover, I like this video over other videos because it’s well oriented.

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Personal Finance in the Elementary Grades

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6.1 Investing - Financial Institutions and Markets

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This is the image of central Bank of Canada, established in 1934 under the Bank of Canada Act. It located at 234 Wellington St W, Ottawa, ON K1A 0G9.

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This is chart published by Trading Economics website. The graph shows an increase of 1,051,590 CAD Million in August from 1,039,508 CAD Million in July of 2019 by the BoC.

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This is an image of five major schedule I domestic banks of Canada. Its federally regulated and also oversees by central Bank of Canada. Their responsibility is to help economic growth and protect the integrity of the capital market.

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Millions of transactions occur within a day, which is worth billions of dollars; this has to looked and verified by the financial institutions. This image conveys how much complex our financial system actually is.

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What did you learn about your topic that surprised you the most