FLC: Banking

Question 1

Legal Tender in Canada

Answer 1

Bank Notes

Question 2

The instrument used by the Bank of Canada to control the money supply, the bank rate is also known as…

Answer 2

Prime Lending Rate

Question 3

What is the overnight lending rate

Answer 3

The interest rate at which major financial institutions borrow and lend overnight (one day) funds among themselves

Question 4

What is the bank’s key interest rate/key policy rate?

Answer 4

The target the Bank sets for the overnight lending rate. Changes in this target rate can affect other interest rates, and the exchange rate of the Canadian dollar.

Question 5

Temporary loan from a financial institution, due to a cheque written for more money than what is in your bank account.

Answer 5

Overdraft

Question 6

Bank of Canada’s 4 main responsibilities

Answer 6

1. MONETARY POLICY (control inflation by adjusting the interest rate)
2. CURRENCY (design, produce, and distribute)
3. promote stable and efficient FINANCIAL SYSTEMS in Canada and the world
4. FUNDS MANAGEMENT (for Canadian gov)

Question 7

Another name for the Bank of Canada

Answer 7

Central Bank of Canada

Question 8

the Bank of Canada helps to control what 2 things?

Answer 8

money supply and interest rate

Question 9

What is a stale dated cheque?

Answer 9

More than 6 months old, so can no longer be cashed

Question 10

What is a PIN?

Answer 10

Personal Identification Number - a confidential electronic signature

Question 11

What is the CDIC?

Answer 11

Canada Deposit Insurance Corporation - insures Canadian deposits in Canadian banks for up to $100, 000 in case of bank failure.

Question 12

Who is Jim Flaherty, and who is the current person

Answer 12

Former Federal Minister of Finance. Current is Bill Morneau

Question 13

Who is Stephen S. Poloz?

Answer 13

Current Governor of Bank of Canada

Question 14

How does the Bank of Canada maintain the value of our dollar?

Answer 14

They increase and decrease our money supply through foreign exchange

Question 15

What is line of credit?

Answer 15

the amount of credit extended to the borrower. It is great for emergencies, pre-arranged with the bank, and only requires payments on a monthly basis.

Question 16

Material of our new bank notes

Answer 16

Synthetic Polymer

Question 17

Which two cities does the Royal Canadian Mint have production operations in?

Answer 17

Winnipeg and Ottawa

Question 18

What is a schedule 2 bank? Ex.?

Answer 18

Foreign bank subsidaries that are authorized under the Bank Act to accept deposits. Ex. ING Bank of Canada

Question 19

What is reconciling

Answer 19

The process of making sure that an individual balance in a transaction register agrees with the info provided on a bank statement.

Question 20

Why are banks critical to the economy?

Answer 20

they put customers’ money to use by lending it out to others.

Question 21

How do banks make money?

Answer 21

fees for services and from the interest they charge on loans (they charge more than they need to pay).

Question 22

Who is primarily responsible for protecting the public from unsafe banking practices?

Answer 22

The agency that charters the bank. They conduct on-site examination.