Bank of Canada and Relative Economic Policies. Mathematics

Bank of Canada and Relative Economic Policies
Name
Institution Affiliation
Economic Policies Affecting Bank of Canada
The financial crisis of 2007-09 that led to the recession of many global countries including those in North America and Europe. A country such as Greece became bankrupt in the process signifying the intensity of the crisis (Ozturk & Sozdemir, 2015). Such economic activities highlight the essence of financial regulation and surveillance from the Canadian authorities. These rules and regulations promote a sound financial institution as well as a stable financial system. In this regard, the relevant authorities identify, evaluate, and mitigate risks. A system-wide approach demands the input and shared responsibility among various financial regulatory authorities and the Department of Finance. The Bank of Canada plays a very crucial role in the articulation of various economic policies particularly, in overseeing and governing money supply to produce effective and efficient economic outcomes.
The Bank of Canada uses its predisposed official policy rate in regulating the level of credit and currency available in the country’s economy. This regulation, which could also be referred to as the discount rate is a vital crucial tool for the resultant lending rate. The bank's primary objective in instituting this policy is to facilitate low, stable as well as predictable inflation. Consequently, this procedure guarantees the nation’s economic and financial welfare is appropriate. High inflation dames the economy (Bank of Canada, n.d.). Moreover, the precept is that the cost of doing business in the country is highly connected to the relative cost of borrowing money. With this tool, the Bank of Canada can also slow the pace of the economic activities through an increase in its official policy rate.
Secondly, most central banks including the Bank of Canada possess the capability to buy and sell securities. This process is done ordinarily via open market operations implying that nothing is done...