Bank of Canada

Purposes:
1) Banker to commercial banks
-Sets overnight target rate, as well as bank rate.
2)Control Money supply
3) Bank to federal Government
4)Manager of countries monetary policy
5) Supporter of the Fiduciary Monetary Policy
- Protects bank run

The following is cited directly from the Bank of Canada website:

As the nation's central bank, the Bank of Canada has four main areas of responsibility:

Monetary Policy

The Bank contributes to solid economic performance and rising living standards for Canadians by keeping inflation low, stable and predictable. Since 1991, the Bank’s monetary policy actions toward this goal have been guided by a clearly defined inflation target.

Currency

The Bank designs, produces and distributes Canada’s bank notes and replaces worn notes. It deters counterfeiting through leading-edge bank note design, public education and collaboration with law-enforcement agencies

Financial System

The Bank promotes a stable and efficient financial system in Canada and internationally. To this end, the Bank oversees Canada’s key payment, clearing and settlement systems; acts as lender of last resort; assesses risks to financial stability; and contributes to the development of financial system policies.

Funds Management

The Bank provides effective and efficient funds-management services for the Government of Canada, as well as on its own behalf and for other clients. For the government, the Bank provides treasury-management services and administers and advises on the public debt and foreign exchange reserves. In addition, the Bank provides bank¬ing services to critical payment, clearing and settlement systems.

"Bank of Canada", bankofcanada.ca, accessed April 16, 2012,
http://www.bankofcanada.ca/about/what-we-do/.

Bank Run:
A bank run is when a bank runs out of cash. Banks not only hold people's money they also

make money by providing loans. If a number of people choose to withdraw their money

simultaneously then the bank my not have the cash on hand necessary to meet people's

demand. In this case, chartered banks can borrow from other chartered banks (at the

overnight target rate) or from the Bank of Canada (at the bank rate) to meet the needs of the

bank's customers.

Stephanie Powers, Practice Final: Version C, Accessed April 16, 2012