Canada: Currency & Financial System

Canada's currency is the Canadian dollar, whose decimal form dates to 1858, when the Province of Canada adopted a system aligned with the US dollar rather than British sterling. Confederation in 1867 and the Uniform Currency Act of 1871 merged the currencies of the founding provinces into a single national dollar, which remained tied to the gold standard until that standard was abandoned during the Great Depression in 1933.

The Bank of Canada, established in 1934, is the country's central bank and sole issuer of Canadian banknotes. The dollar moved through a series of fixed and managed exchange rates over the twentieth century, including a peg to the US dollar from 1962 to 1970, before Canada let it float freely in 1970 as a measure against inflation; it has traded on a floating basis ever since, with the Bank stating that market conditions, rather than an official target value, determine its worth.

As of 2026, the Bank of Canada's monetary policy is guided by a formal inflation-control target of 2 percent, within a range of 1 to 3 percent, under an agreement with the federal government that was most recently renewed in December 2021 to run through the end of 2026. The central bank uses its benchmark interest rate as its principal tool for keeping inflation near that target while supporting the stability of Canada's broader financial system.