Central Bank

Definition

• A financial institution that is responsible for managing a nation's currency, money supply, and interest rates. Most central banks also oversee their nation's commercial banking system, while possessing a monopoly over a nation's monetary base. The central bank of Canada is the Bank of Canada. Also known as a "reserve bank," or "monetary authority."

Synonyms
main bank

Related Terms and Acronyms

• Canada Mortgage and Housing Corporation (CMHC) — Company Est. 1946, Canada-wide, Very Important,
  • The Canada Mortgage and Housing Corporation: this is a Federally run institution that provides banks and lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure CMHC assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also "G.E. Capital."
  ➥ Insures Canadian mortgage lenders.
• Commerce — Definition,
  • The systems and activities that impact business and trade within a nation and abroad.
• Finance Canada — Company, Canada-wide,
  • Federal department responsible for Canada's economic performance and regulation of financial institutions.
• Fiscal Policy — Definition,
  • The use of government spending and taxation policies to influence the economy.
• International Banking — Definition,
  • The operation of bank branches and subsidiaries located outside Canada. This area of banking also includes the supervision of correspondent banking relationships, foreign exchange trading, and trade finance.
• Large Value Transfer System (LVTS) — Acronym,
  • System being created by the Canadian Payments Association that will settle large value payments, possibly $50,000 and over, at the central bank on a same-day basis.
• Prime Rate — Definition,
  • The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.
• Regional Bank — Definition,
  • A bank with a primary market in a regional or metropolitan area but takes deposits from throughout the province in which it is located. Usually called a Credit Union in Canada.
• Schedule I Banks — Definition,
  • A designation in the Bank Act that refers to Canadian-owned banks that are widely held, i.e., ones in which no one owner holds more than 10% of shares.
• Schedule II Banks — Definition,
  • A designation in the Bank Act that refers to foreign-owned banks and closely held Canadian banks, i.e., banks in which an owner may hold more than 10% of outstanding stock.