Banking system in early Canada (British North American and New France)was non existence, so money was managed by the military and the crown. In New France, cards were issued as a method of payment in 1680s by Clerk of the Treasury Board in addition to coins introduced in the 1660s. For the British, Army Bills (1812), Spannish currency, Halifax Standard, American coins and English pounds were used as payment. Montreal merchants attempted to create a bank in 1782, but it was not until 1817 did a banking system emerge.
Banks can thereby diversify their loans, and this in turn means that a bank is at less risk if one of its customers fails to repay a loan.
Broadly speaking, central banks serve as the government’s banker, as the banker to the bankingsystem, and as the policymaker for monetary and financial matters.
Banks have historically financed international trade, but a notable recent development has been the expansion of branches and subsidiaries that are physically located abroad, as well as the increased volume of loans to foreign borrowers.
The regulator of federally chartered Canadianbanks and financial institutions is the Office of the Superintendent of Financial Institutions (OSFI), which was established in 1987.
Bank failures were common; so in the early 19th century, stock-issuing banks, with a larger capital base, were encouraged as a means of stabilizing the industry.
The dominance of the clearing banks was challenged in recent years by the rise of “parallel markets,” encompassing financial activities by smaller banking houses, building societies (banking institutions similar to SLAs in the United States), and other financial concerns, as well as local government authorities.
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