Working Paper: NBER ID: w2079
Authors: Michael Bordo; Angela Redish
Abstract: 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.
Keywords: Bank of Canada; central banking; political economy; Great Depression
JEL Codes: N01; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political pressures (D72) | Emergence of the Bank of Canada in 1935 (N12) |
| Socio-political environment (O17) | Emergence of the Bank of Canada in 1935 (N12) |
| Political climate (D72) | Establishment of the Bank of Canada (N22) |
| International trends (F01) | Establishment of the Bank of Canada (N22) |