NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Why did the Bank of Canada Emerge in 1935?

Michael D. Bordo, Angela Redish

NBER Working Paper No. 2079 (Also Reprint No. r0966)
Issued in 1988
NBER Program(s):   ME

Three possible explanations for the emergence of the Canadian central bank in 1935 are examined: that it reflected the need of competitive banking systems for a lender of the last resort; that it was necessary to anchor the unregulated Canadian monetary system after the abandonment of the gold standard in 1929; and that it was a response to political rather than purely economic pressures. Evidence from a variety of sources (contemporary statements to a Royal Commission, the correspondence of chartered bankers, newspaper reports, academic writings and the estimation of time series econometric models) rejects the first two hypotheses and supports the third.

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Published: Bordo, Michael D. and Angela Redish. "Why did the Bank of Canada Emerge in 1935?" Journal of Economic History, Vol. XLVII, No. 2, June 1987, pp. 405-4 17.

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