Canadian Banking System

Comparing Canada and United States Banking System

History of the use of currency

The use of currency in Canada has evolved much over time, starting from the early 1600s to date. This is also the same period that America started using currencies. In the early 1600s, in Canada, beaver pelts were the universally accepted medium of exchange. In the mid-1600s, Wampum made from shell beads replaced the beaver pelts as the country’s currency. The country introduced its first card money that was printed on playing cards on June 8, 1685. However, the card money was criticized because it was relatively easy to counterfeit. In 1722 Copper coins replaced the card money. At the beginning of the 18th century, the colony was faced with the challenge of the

The paper money was first used to pay for military expeditions. In 1734, Benjamin Franklin started producing colonial notes that could not be counterfeited. In 1775, the continental currency was developed, but it lost its value because it was easy to counterfeit (The U.S Currency Education program, 2015). One year later, the first $2 note was produced. In 1861, the need to finance the Civil War resulted in the Congress authorizing the issuance of the non-interest-bearing Demand Notes. Consequently, the first $10 notes were produced with the portrait of President Lincoln. 1862 marked the foundation of the modern design of the American dollar (The U.S Currency Education program,

This is because Canada inherited the United States’ free banking system in the 1850s. In 1854, the Canadian government amended the charter for the Bank of Montreal to incorporate changes that were to be implemented by all other banks (Marianopolis College, 2016). For example, every bank had to submit a monthly return to the government. The 1867 constitutional amendment mandated the Dominion government to control the country's currency and banking system. In 1891, the Canadian Bankers Association was established whose role was to establish a structure that the Dominion government would use to communicate with banks. In 1900, the National government enacted the Bank Act that made it mandatory for every bank in the country to be a member of the Canadian Banker Association. In 1935, the central Bank of Canada was established (Marianopolis College,