Who is a central bank for? The founding and legal design of the Bank of Canada

Abstract The Bank of Canada is an independent Crown corporation that sees its primary responsibility to be promoting Canada’s economic welfare by maintaining low and stable inflation. When it was first created in 1934, however, the Bank was a radically different institution—a privately owned corporation primarily meant to anchor Canada’s economy globally and manage foreign exchange. Not only was the Bank not tasked with managing inflation, but key policymakers behind its founding thought doing so would be a severe mistake. This article offers the first legal history of the Bank’s founding. It maps the enormous public debate that accompanied the creation of the Bank and the various, often contradictory visions expressed for it. The article labels these five visions: a Bankers’ Bank, a Government Bank, an Imperial Bank, an Economists’ Bank, and a Bank of the People. The article then looks at the original legal design of the Bank and argues that it largely fit the Imperial Bank model. Charting this history helps us better understand this vital organ of Canadian government, and has the potential to upset many of our accepted, contemporary notions of central banking.