How the Bank of Canada Creates Money


ABSTRACT

This paper provides a general understanding of the process by which the Bank of Canada (BoC) creates money through large scale asset purchases. It categorizes each of the different types of operations into three distinct “methods”, and describes each of these methods in a way that is meant to be understandable to the generalist reader. This paper is descriptive in nature and does not delve into the correctness of specific policy actions, nor is it prescriptive regarding the potential for future policy actions by the Bank of Canada.

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How the Bank of Canada Creates Money