chapter 18 lists Flashcards
what are the four ways the bank of canada promotes economic and financial welfare of Canada?
conducting monetary policy
promoting the safety and efficiency of Canadas financial system
providing efficient and effective funds management services
communicating our objectives openly and standing accountable for our actions
what three groups comprise the canadian financial system?
financial institutions
financial markets
clearing and settlement systems
what is the 4 pillar system?
it was the way the Canadian financial system was originally organized
originally the canadian financial system was a four pillar system, what were those four pillars?
banks
trust companies
insurance companies
securities dealers
what are the two types of customers commercial banks have?
depositors and borrowers
what are the five things the canadian financial market consist of?
money
bonds
equities
derivatives
foreign exchange
what are the 2 major functions of securities markets?
provide businesses with long term funding to finance capital needs
platform for private investors to buy and sell securities to build their financial future
what are the five key criteria when selecting investment options?
investment risk
yield (expected rate of return)
duration (length of time your money is committed to that investment)
liquidity ( how quickly you can get your funds back if you need them)
tax consequences
what are different securities you can invest in?
stocks
bonds
ETFs
what is a financial market infrastructure (FMI)?
a financial market infrastructure (FMI) is a system that facilitates the clearing, settling or recording of payments, securities, derivatives or other financial transactions among participating entities
how does a financial market infrastructure work?
at the end of the day if a commercial bank only had $300,00 worth of deposits but they had $500,000 worth of withdrawals the FMI would have to borrow from other banks or the BoC and balance their deposits and withdrawals
what are the three types of FMIs?
payment systems
central counterparties (CCPs)
securities settlement systems
what are the 5 characteristics of a good money system?
portability
divisibility
stability
durability
uniqueness
what are 5 disadvantages to digital currencies?
not legal tender in canada
hard to exchange for cash or goods and services
vulnerable to fraud and theft
transactions are not reversible
risky investments
why is Canadas financial system heavily regulated?
to ensure the integrity, safety and soundness of the financial institutions and protect investors, depositors and shareholders
