Bank of Canada Exchange Rates.

Digging deeper into the subject of exchange rates in Canada would require you to learn a little something about the Bank of Canada, which is Canada's Central Bank. The Bank of Canada only officially started its role as the country's central bank in 1934. Prior to this, the large banks in Canada issued their own currency and there was little control over the national money supply. Today, the Bank of Canada is the sole issuer of the Canadian dollar and Canadian banknotes.

The Bank of Canada utilizes a policy called inflation-control targeting, where the inflation goal is kept at a 2 to 3 percent target range. Basically, inflation is the rate by which the price of utilities and commodities rise over time. Now, when inflation is kept at minimum, the economy of the country will benefit and the value of the Canadian dollar will increase. This is especially helpful for investors and small entrepreneurs in the country because they would not hesitate to make new investments and expand their business. More jobs, more productivity, improvements in the standard of living and a well-functioning economy are the additional benefits of the inflation-control targeting policy implemented by the Bank of Canada.

Meanwhile, another aspect of running the daily operations of the Bank of Canada is dealing with the different financial institutions in the country. These include banks, credit unions, non-bank lenders, community banks and the smaller –scale financial organizations of clubs and associations. The central bank does not have regulation powers over these institutions, however. Finally, dealing with the financial market, the Canadian foreign exchange trading industry, payments, clearing and other settlement systems is also part of the daily operations of the Bank of Canada.