What is Money?

<aside> 💡 Money as a Medium of Exchange The double coincidence of wants is unnecessary when a medium of exchange is used

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• Medium of exchange
• A store of value
• A unit of account

The Canadian Banking System

The Bank of Canada

The system of joint responsibility keeps the conduct of monetary policy free from day-to-day political influence while ensuring that the government retains ultimate responsibility for monetary policy

Two Assumptions:

• No execess reserves
• No cash drain from the banking system

The central bank can influence the interest rate through open market operations (and thus changing the banks’ reserves)