ted white, m.p.

advertonial, June 3/1998

THE BANK OF CANADA

From time to time people call me
with questions about the Bank of
Canada. What does it do, why is it
necessary, and who owns it, are
usuaily at the top of the list, but a few
weeks ago a man called me with some
questions { could not answer. As a
result, | got in touch with the Bank to
obtain more information, and { am
sharing some of that information with
you today. If you would like to know
even more, you can contact the Bank of
Canada directly at 1-800-303-1282 or
via email at: paffairs@bank-banque-
canada.ca. The Bank’s website is

_ located at www.bank-banque-
canada.ca.
MAKING THE OWNERS RICH

One issue which seems to surface in
most of the calls | have received about the
Bank is the matter of ownership. There
seems to be a widely held, but completely
erroneous, impression that a few private
shareholders are making billions of doliars
via their shareholdings in the Bank of
Canada. In fact, 100% of the shares are
held by the Government of Canada, so

“any profits made by the Bank are returned
to -he. Treasury for the benefit of all
Car-adians.

- tis true that the Bank of Canada, when
it fist opened its doors in March of 1935,
wa: a privately owned corporation, with
put licly traded shares. However, the Bank
was nationalized in 1938 and has
remained publicly owned to this day.

WHY IS IT THERE?

The preamble to the Bank of Canada
Act, which defines the Bank's functions,
states that the Bank exists “to regulate
credit and currency in the best

vinterests of the economic life of the
nation.” As Canada’s “central bank” it
-does not carry out an ordinary type of
banking business, nor does it accept
“deposits from the public. It does, however,
“determine how much currency is in
circulation and pursues policies designed
“te prevent erosion of the value of that
“currency by inflation. In addition, it ends up
_influencing everyone's spending decisions
“ because of its ability io affect short term
“interest rates.
a he One major function carried out by the
} Bank-of Canada is the settling of accounts
‘between the major financial institutions.
“Each day the claims: of one financial
institution on the other are calculated, and
ransfer of funds takes place to settle
ints ~ a transfer which takes place on
ne books. of the Bank of Canada where
most._of. the largest deposit taking
titutions have accounts. The Bank of
Ce nada also handles the accounts of the
Receiver . General, through which flows
irtually all of the money collected and
pent by the Government of Canada, as
“Jowell as operating accounts for. foreign
“exchange and international financial
i institutions.

Canada's foreign exchange reserves,
including the gold reserves, are managed
‘by the Bank of Canada, with active
interventions
markets. when it.is necessary to smooth
‘out the rise and/or fall of the dollar. Debt
“management for the Government of
- Canada, the issuing and administration of
“Canada Bonds and treasury bills, and the

into foreign exchange’

printing and issuing of bank notes are
other important functicns of the Bank. It
must tailor the supply of currency to the
public demand for bank notes through the
banks and other financial institutions, as
well as destroying and replacing bank
notes which have reached the end of their
lifespan.
RUNNING THE BANK

The Bank of Canada Act provides the
Bank with a large amount of indepen-
dence from the Government, and although
the Government is authorized to over-rule
a decision of the Bank through a public,
written directive, no such directive has
ever been issued.

The present Governor of the Bank is
Gordon G. Thiessen, who was appointed
in 1994 by the Directors, with the approval
of the Federal Cabinet, for the customary
seven year term. He is joined on the Board
of Directors by the Senior Deputy
Governor, twelve Directors, and the
Deputy Minister of Finance, who has no
vote but provides the link with the
Department of Finance. The twelve
Directors are appointed by the Minister of
Finance, with Cabinet approval, for three
year terms, and are mandated to ensure
that the Bank is being run in a competent
manner.

The Board reviews the broad policies

being pursued by the Bank, and approves |

the corporate objectives and the annual
budget. In addition, the external auditors
teport to the Board of Directors. It is the
senior management of the Bank, however,
which formulates and implements
monetary policy, reporting to the Board
and the Executive Committee at their
regular meetings, which are held at feast
seven times ech year. The Directors
come from alt parts of Canada, with
Joseph Segal, CM being the
representative from British Columbia.
SNIPPETS

The 1$97 Annual Report of the Bank of
Canada indicates net operating expenses
for the year were $144.2 million dollars,
down from $213.7 million a year earlier.
Revenues amounted to $1.578 billion, so
$1.434 billion in net revenue (profits) was
paid to the Receiver General for Canada
that year. Assets of the Bank, in US dollars
and other currencies, treasury bills and
other securities, and bank premises
totalled $31,749 billion, while bank notes
in circulation totalled $30,542 billion. The
Bank found just over $2.5 million worth of
counterfeit bank notes in circulation (a
small fraction of one percent of the total)
but this was more than a million higher

.than the figure for 1996. One of the many

responsibilities of the Bank is the
administration cf-the Government's “retail
debt”, mainly comprised of Canada
Savings Bonds, but it also raonitors
unclaimed bank deposits, and turns over
to the Government any amounts less than
$500 which remain unclaimed for 20
years. Larger amounts are kept
indefinitely.
VISITING THE BANK

You can visit the Bank of Canada, the
Currency Museum, and the Mint, if or
when you happen to be in Ottawa. Most
hotels carry brochures and _ information
about the tours which are available to the

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Wednesday, June 3, 1998 — North Shore News — 9

north shore news

__MAIL Box

Focus attention on causes
of high-speed ‘evasions’

Dear Editor:

Re: May 27 Leo Knight
column.

I agree with your com-
ments on high-speed pursuits
or, as commonly noted in the
media as a high-speed chase.

I do, however, wonder
how much the media through
their use of words and the
public through their accep-
tance of the connotation of
those words are accentuating
the problem. [f a high-speed
chase creates unacceprable
consequences (i.e. death, per-
sonal injury or property dam-
age) then we, the public, want

Tax raie deterring B.C.

Dear Editor:

Vith respect to your May 3
editorial, Tam quizzical “of
your last paragraph which
tended to allude to 57,000
jobs and a growth rate of 22%
in this province in the technol-
ogy industry this year. Those
figures are actually the total of
all those employed in all the
technology industries
throughour British Columbia.

This is a growing industry
bur we must remember that a

to climinate the cause of the
high-speed chase. Who do we
artack?

The wording provides the
clue. We attack the named
cause and in this case it is the
chaser. Therefore when we
want to stop high-speed chas-
es, which almost always
involve the police as the chas-
er, the public response is to try
to limit the police ability to
chase.

Tf we described the event in
another way, probably the way
many of us think bur don’t
ralk, we could describe these
events as high-speed evasions.

great deal of our new technol-
ogy is melded within our exist-
ing resource industries, which
is no longer just a “dirt”
industry. Technology abounds
in our mining and forestry
industry and this is good. We
are seeing our manpower “the
brain drain” resource going to
other jurisdictions, ostensibly
due to taxation and education
opportunities. A taxation level
of 32% is more attractive than
54.5% which we pay on a

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Using the same logic as
above, if we want to eliminate
the cause, who would we
artack? We would attack the
named cause and in this case it
is the evader.

I think the media should
focus on not only the event
but also on the cause of the
event. Would the News be a
leader in’ describing these
events as high-speed evasions?
T think this would focus dis-
cussion where it belongs:
those who show no regard for
the law.

John Eustace
jeustace@be.sympatico.ca

business.

$60,000 annual income, while
in the U.S.A. their super tax
cuts in at 39% on an income of
$200,000 plus.

The industry’s perception
of the present B.C. govern-
ment is disturbing and
although they believe that
everyone working together
will improve the industry, our
high taxation is the deterring
factor. It is a philosophical
approach that is needed.
Daniel Jarvis, MLA
iNorth Vancouver-Seymour

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