Canadian dollar
Overview
 
The Canadian dollar is the currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

 of Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign
Dollar sign
The dollar or peso sign is a symbol primarily used to indicate the various peso and dollar units of currency around the world.- Origin :...

 $, or C$ to distinguish it from other dollar
Dollar
The dollar is the name of the official currency of many countries, including Australia, Belize, Canada, Ecuador, El Salvador, Hong Kong, New Zealand, Singapore, Taiwan, and the United States.-Etymology:...

-denominated currencies. It is divided into 100 cents
Cent (currency)
In many national currencies, the cent is a monetary unit that equals 1⁄100 of the basic monetary unit. Etymologically, the word cent derives from the Latin word "centum" meaning hundred. Cent also refers to a coin which is worth one cent....

.
In 1841, the Province of Canada
Province of Canada
The Province of Canada, United Province of Canada, or the United Canadas was a British colony in North America from 1841 to 1867. Its formation reflected recommendations made by John Lambton, 1st Earl of Durham in the Report on the Affairs of British North America following the Rebellions of...

 adopted a new system based on the Halifax rating
Halifax rating
The Halifax rating was a valuation of the Spanish dollar in the £sd accounting system. It set the Spanish dollar at a value of 5 shillings and was established c.1750 in Halifax, Nova Scotia...

. The new Canadian pound
Canadian pound
The pound was the unit of account for currency of the Canadas until 1858. It was subdivided into 20 shillings, each of 12 pence. In Lower Canada, the sou was used, worth penny...

 was equal to four US dollars
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

 (92.88 grains gold), making one pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

 equal to 1 pound, 4 shillings, and 4 pence Canadian.
Encyclopedia
The Canadian dollar is the currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...

 of Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign
Dollar sign
The dollar or peso sign is a symbol primarily used to indicate the various peso and dollar units of currency around the world.- Origin :...

 $, or C$ to distinguish it from other dollar
Dollar
The dollar is the name of the official currency of many countries, including Australia, Belize, Canada, Ecuador, El Salvador, Hong Kong, New Zealand, Singapore, Taiwan, and the United States.-Etymology:...

-denominated currencies. It is divided into 100 cents
Cent (currency)
In many national currencies, the cent is a monetary unit that equals 1⁄100 of the basic monetary unit. Etymologically, the word cent derives from the Latin word "centum" meaning hundred. Cent also refers to a coin which is worth one cent....

.

From the Canadian pound to the Canadian dollar

In 1841, the Province of Canada
Province of Canada
The Province of Canada, United Province of Canada, or the United Canadas was a British colony in North America from 1841 to 1867. Its formation reflected recommendations made by John Lambton, 1st Earl of Durham in the Report on the Affairs of British North America following the Rebellions of...

 adopted a new system based on the Halifax rating
Halifax rating
The Halifax rating was a valuation of the Spanish dollar in the £sd accounting system. It set the Spanish dollar at a value of 5 shillings and was established c.1750 in Halifax, Nova Scotia...

. The new Canadian pound
Canadian pound
The pound was the unit of account for currency of the Canadas until 1858. It was subdivided into 20 shillings, each of 12 pence. In Lower Canada, the sou was used, worth penny...

 was equal to four US dollars
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

 (92.88 grains gold), making one pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

 equal to 1 pound, 4 shillings, and 4 pence Canadian. Thus, the new Canadian pound
Canadian pound
The pound was the unit of account for currency of the Canadas until 1858. It was subdivided into 20 shillings, each of 12 pence. In Lower Canada, the sou was used, worth penny...

 was worth 16 shillings and 5.3 pence.

The 1850s was a decade of wrangling over whether to adopt a sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

 monetary system or a decimal monetary system based on the US dollar. The local population, for reasons of practicality in relation to the increasing trade with the neighbouring United States, had a desire to assimilate the Canadian currency with the American unit, but the imperial authorities in London still preferred the idea of sterling to be the sole currency throughout the British Empire
British Empire
The British Empire comprised the dominions, colonies, protectorates, mandates and other territories ruled or administered by the United Kingdom. It originated with the overseas colonies and trading posts established by England in the late 16th and early 17th centuries. At its height, it was the...

. In 1851, the Legislative Council
Legislative Council of the Province of Canada
The Legislative Council of the Province of Canada was the upper house for the Province of Canada, which consisted of the former provinces of Lower Canada, then known as Canada East and later the province of Quebec, and Upper Canada, then known as Canada West and later the province of Ontario...

 and the Legislative Assembly
Legislative Assembly of the Province of Canada
The Legislative Assembly of the Province of Canada was the lower house of the legislature for the Province of Canada, which consisted of the former provinces of Lower Canada, then known as Canada East and later the province of Quebec, and Upper Canada, then known as Canada West and later the...

 of Canada passed an act for the purposes of introducing a pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

 unit in conjunction with decimal fractional coinage. The idea was that the decimal coins would correspond to exact amounts in relation to the US dollar fractional coinage.

As a compromise, in 1853 an act of the Legislative Council and Assembly of Canada introduced the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...

 into Canada, based on both the British gold sovereign and the American gold eagle coins
Eagle (United States coin)
The eagle is a base-unit of denomination issued only for gold coinage by the United States Mint. It has been obsolete as a circulating denomination since 1933. The eagle was the largest of the four main decimal base-units of denomination used for circulating coinage in the United States prior to...

. This gold standard was introduced with the gold sovereign being legal tender at £1 = $US. No coinage was provided for under the 1853 act. Sterling coinage was made legal tender and all other silver coins were demonetized. The British government in principle allowed for a decimal coinage but nevertheless held out the hope that a sterling unit would be chosen under the name of 'royal'. However, in 1857, the decision was made to introduce a decimal coinage into Canada in conjunction with the US dollar unit. Hence, when the new decimal coins were introduced in 1858, Canada's currency became aligned with the US currency, although the British gold sovereign continued to remain legal tender at the rate of £1 = right up until the 1990s. In 1859, Canadian postage stamps were issued with decimal denominations for the first time.

In 1861, New Brunswick
New Brunswick
New Brunswick is one of Canada's three Maritime provinces and is the only province in the federation that is constitutionally bilingual . The provincial capital is Fredericton and Saint John is the most populous city. Greater Moncton is the largest Census Metropolitan Area...

 and Nova Scotia
Nova Scotia
Nova Scotia is one of Canada's three Maritime provinces and is the most populous province in Atlantic Canada. The name of the province is Latin for "New Scotland," but "Nova Scotia" is the recognized, English-language name of the province. The provincial capital is Halifax. Nova Scotia is the...

 followed Canada in adopting a decimal system based on the US dollar unit. In the following year, Canadian postage stamps were issued with the denominations shown in dollars and cents.

Newfoundland
History of Newfoundland and Labrador
The History of Newfoundland and Labrador is the story of the peoples who have lived in what is now the Canadian province of Newfoundland and Labrador....

 went decimal in 1865, but unlike in the cases of Canada, New Brunswick, and Nova Scotia, it decided to adopt a unit based on the Spanish dollar
Spanish dollar
The Spanish dollar is a silver coin, of approximately 38 mm diameter, worth eight reales, that was minted in the Spanish Empire after a Spanish currency reform in 1497. Its purpose was to correspond to the German thaler...

 rather than on the US dollar, and there was a slight difference between these two units. The US dollar was created in 1792 on the basis of the average weight of a selection of worn Spanish dollars. As such, the Spanish dollar was worth slightly more than the US dollar, and likewise, the Newfoundland dollar
Newfoundland dollar
The dollar was the currency of the colony and Dominion of Newfoundland from 1865 until 1949, when Newfoundland became a province of Canada. It was subdivided into 100 cents.-History:...

 while it existed, was worth slightly more than the Canadian dollar.

In 1867, Canada, New Brunswick, and Nova Scotia united in a federation called the Dominion of Canada and the three currencies were united.

In 1871, Prince Edward Island
Prince Edward Island
Prince Edward Island is a Canadian province consisting of an island of the same name, as well as other islands. The maritime province is the smallest in the nation in both land area and population...

 went decimal within the US dollar unit and introduced coins for 1¢. However, the currency of Prince Edward Island was absorbed into the Canadian system shortly afterwards, when Prince Edward island joined the Dominion of Canada.
Currencies used in Canada
CurrencyDates in useValue in British poundsValue in Canadian dollars
Canadian pound
Canadian pound
The pound was the unit of account for currency of the Canadas until 1858. It was subdivided into 20 shillings, each of 12 pence. In Lower Canada, the sou was used, worth penny...

1841–1858 16s 5.3d $4
Canadian dollar 1858–present 4s 1.3d $1
New Brunswick dollar
New Brunswick dollar
The dollar was the currency of New Brunswick between 1860 and 1867. It replaced the pound at a rate of 4 dollars = 1 pound and was equal to the Canadian dollar...

1860–1867
British Columbia dollar
British Columbia dollar
The dollar was the currency of British Columbia between 1865 and 1871. It replaced the British pound at a rate of 1 pound = 4.866 dollars and was equivalent to the Canadian dollar, which replaced it. The dollar was subdivided into 100 cents...

1865–1871
Prince Edward Island dollar
Prince Edward Island dollar
The dollar was the currency of Prince Edward Island between 1871 and 1873. It replaced the pound at a rate of 1 pound = 4.866 dollars and was equivalent to the Canadian dollar, which replaced it in 1873. The dollar was subdivided into 100 cents.-Coins:...

1871–1873
Nova Scotian dollar
Nova Scotian dollar
The dollar was the currency of Nova Scotia between 1860 and 1871. It replaced the Nova Scotian pound at a rate of 5 dollars = 1 pound and was consequently worth less than the Canadian dollar...

1860–1871 4s $0.973
Newfoundland dollar
Newfoundland dollar
The dollar was the currency of the colony and Dominion of Newfoundland from 1865 until 1949, when Newfoundland became a province of Canada. It was subdivided into 100 cents.-History:...

1865–1895 4s 2d $1.014
1895–1949 4s 1.3d $1


The federal Parliament passed the Uniform Currency Act in April 1871, tying up loose ends as to the currencies of the various provinces and replacing them with a common Canadian dollar. The gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...

 was temporarily abandoned during the First World War
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

 and definitively abolished on April 10, 1933. At the outbreak of the Second World War
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

, the exchange rate to the US dollar was fixed at 1.1 Canadian dollars = 1 US dollar. This was changed to parity in 1946. In 1949, sterling was devalued and Canada followed, returning to a peg of 1.1 Canadian dollars = 1 US dollar. However, Canada allowed its dollar to float in 1950, returning to a fixed exchange rate only in 1962, when the dollar was pegged at 1 Canadian dollar = 0.925 US dollar. This peg lasted until 1970, after which the currency's value has floated.

Terminology

Canadian English
Canadian English
Canadian English is the variety of English spoken in Canada. English is the first language, or "mother tongue", of approximately 24 million Canadians , and more than 28 million are fluent in the language...

, like American English
American English
American English is a set of dialects of the English language used mostly in the United States. Approximately two-thirds of the world's native speakers of English live in the United States....

, uses the slang term "buck
Dollar
The dollar is the name of the official currency of many countries, including Australia, Belize, Canada, Ecuador, El Salvador, Hong Kong, New Zealand, Singapore, Taiwan, and the United States.-Etymology:...

" for a dollar. The Canadian origin of this term derives from a coin struck by the Hudson's Bay Company
Hudson's Bay Company
The Hudson's Bay Company , abbreviated HBC, or "The Bay" is the oldest commercial corporation in North America and one of the oldest in the world. A fur trading business for much of its existence, today Hudson's Bay Company owns and operates retail stores throughout Canada...

 during the 17th century with a value equal to the pelt
Fur
Fur is a synonym for hair, used more in reference to non-human animals, usually mammals; particularly those with extensives body hair coverage. The term is sometimes used to refer to the body hair of an animal as a complete coat, also known as the "pelage". Fur is also used to refer to animal...

 of a male beaver
Beaver
The beaver is a primarily nocturnal, large, semi-aquatic rodent. Castor includes two extant species, North American Beaver and Eurasian Beaver . Beavers are known for building dams, canals, and lodges . They are the second-largest rodent in the world...

 – a "buck". Because of the appearance of the common loon on the back of the dollar coin that replaced the dollar bill in 1987, the word "loonie
Loonie
The Canadian 1 dollar coin is a gold-coloured, bronze-plated, one-dollar coin introduced in 1987. It bears images of a common loon, a bird which is common and well known in Canada, on the reverse, and of Queen Elizabeth II on the obverse.The design for the coin was meant to be a voyageur theme,...

" was adopted in Canadian parlance to distinguish the Canadian dollar coin from the dollar bill. When the two-dollar coin was introduced in 1996, the derivative word "toonie
Toonie
The Canadian 2 dollar coin, commonly called Toonie, was introduced on February 19, 1996 by Public Works minister Diane Marleau. The Toonie is a bi-metallic coin which bears an image of a polar bear, by Campbellford, Ontario artist Brent Townsend, on the reverse. The obverse, like all other current...

" ("two loonies") became the common word for it in Canadian English slang.

In French
French language
French is a Romance language spoken as a first language in France, the Romandy region in Switzerland, Wallonia and Brussels in Belgium, Monaco, the regions of Quebec and Acadia in Canada, and by various communities elsewhere. Second-language speakers of French are distributed throughout many parts...

, the currency is also called le dollar; Canadian French
Canadian French
Canadian French is an umbrella term referring to the varieties of French spoken in Canada. French is the mother tongue of nearly seven million Canadians, a figure constituting roughly 22% of the national population. At the federal level it has co-official status alongside English...

 slang terms include piastre
Piastre
The piastre or piaster refers to a number of units of currency. The term originates from the Italian for 'thin metal plate'. The name was applied to Spanish and Latin American pieces of eight, or pesos, by Venetian traders in the Levant in the 16th century.These pesos, minted continually for...

or piasse (same as "buck", but the original word used in 18th-century French to translate "dollar") and huard (equivalent to "loonie", since huard is French for "loon," the bird appearing on the coin). The French pronunciation of "cent" is generally used for the subdivision; sou is another, informal, term for 1¢. 25¢ coins
Quarter (Canadian coin)
The quarter is a Canadian coin, valued at 25 cents or one-fourth of a Canadian dollar. It is a small, circular coin of silver colour. According to the Royal Canadian Mint, the official name for the coin is the 25-cent piece, but in practice it is simply called a quarter.-History of...

 in Quebec French are often called trente sous (thirty cents) because of a series of changes in terminology, currencies, and exchange rates. After the British conquest of Canada in 1759, French coins gradually went out of use, and sou became a nickname for the halfpenny, which was similar in value to the French sou. Spanish dollars and US dollars were also in use, and from 1841 to 1858, the exchange rate was fixed at $4 = £1 (or 400¢ = 240d). This made 25¢ equal to 15d, or 30 halfpence (trente sous). After decimalization and the withdrawal of halfpence coins, the nickname sou began to be used for the 1¢ coin
Penny (Canadian coin)
In Canada, a penny is a coin worth one cent or of a dollar. According to the Royal Canadian Mint, the official national term of the coin is the "one-cent piece", but in practice the term penny or cent is universal. Originally, "penny" referred to a two-cent coin. When the two-cent coin was...

, but the idiom trente sous for 25¢ endured.

Coins

In 1858, bronze 1¢ and 0.925 silver 5¢, 10¢ and 20¢ coins were issued by the Province of Canada. Except for 1¢ coins struck in 1859, no more coins were issued until 1870, when production of the 5¢ and 10¢ was resumed and silver 25¢ and 50¢ were introduced. Between 1908 and 1919, sovereigns (legal tender in Canada for $) were struck in Ottawa with a "C" mintmark. Gold $5 and $10 coins were issued between 1912 and 1914.

In 1920, the size of the 1¢ was reduced and the silver fineness of the 5¢, 10¢, 25¢ and 50¢ coins was reduced to 0.800 silver/.200 copper. This composition was maintained for the 10¢, 25¢ and 50¢ piece through 1966, but the debasement of the 5¢ piece continued in 1922 with the silver 5¢ being entirely replaced by a larger nickel coin. In 1942, as a wartime measure, nickel was replaced by tombac
Tombac
Tombac, as spelled in French, or Tombak is a brass alloy with high copper content and 5-20% zinc content. Tin, lead or arsenic may be added for colouration.It is a cheap malleable alloy mainly used for medals, ornament, decoration and some munitions....

 in the 5¢ coin, which was changed in shape from round to dodecagonal. Chromium-plated steel was used for the 5¢ in 1944 and 1945 and between 1951 and 1954, after which nickel was readopted. The 5¢ returned to a round shape in 1963.

In 1935, the 0.800 silver Voyageur dollar
Voyageur Dollar
The Voyageur Dollar was a coin of Canada struck for circulation in silver from 1935 to 1966, and as a commemorative in 2003. A nickel version was struck from 1968 to 1987. In 1987, the coin was replaced by the loonie. The coin remains legal tender....

 was introduced. Production was maintained through 1967 with the exception of the war years between 1939 and 1945.

In 1967 both 0.800 silver/0.200 copper and, later that year, 0.500 silver/.500 copper 10¢ and 25¢ coins were issued. 1968 saw further debasement: the 0.500 fine silver dimes and quarters were completely replaced by nickel ones mid-year. All 1968 50¢ and $1 coins were reduced in size and coined only in pure nickel. Thus, 1968 marked the last year in which any circulating silver coinage was issued in Canada.

In 1982, the 1¢ coin was changed to dodecagonal and the 5¢ was further debased to a cupro-nickel alloy. In 1987, a $1 coin struck in aureate-plated nickel was introduced. A bimetallic $2 coin followed in 1996. In 1997, copper-plated zinc replaced bronze in the 1¢. This was followed, in 2000, by the introduction of even cheaper plated-steel 1¢, 5¢, 10¢, 25¢ and 50¢ coins, with the 1¢ plated in copper and the others plated in cupro-nickel.

Coins are produced by the Royal Canadian Mint
Royal Canadian Mint
The Royal Canadian Mint produces all of Canada's circulation coins, and manufactures circulation coins on behalf of other nations. The Mint also designs and manufactures: precious and base metal collector coins; gold, silver, palladium, and platinum bullion coins; medals, as well as medallions and...

 in Winnipeg
Winnipeg
Winnipeg is the capital and largest city of Manitoba, Canada, and is the primary municipality of the Winnipeg Capital Region, with more than half of Manitoba's population. It is located near the longitudinal centre of North America, at the confluence of the Red and Assiniboine Rivers .The name...

, Manitoba
Manitoba
Manitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other...

, and currently issued in denominations of 1¢ (penny
Penny (Canadian coin)
In Canada, a penny is a coin worth one cent or of a dollar. According to the Royal Canadian Mint, the official national term of the coin is the "one-cent piece", but in practice the term penny or cent is universal. Originally, "penny" referred to a two-cent coin. When the two-cent coin was...

), 5¢ (nickel
Nickel (Canadian coin)
The Canadian five-cent coin, commonly called a nickel, is a coin worth five cents or one-twentieth of a Canadian dollar. It was patterned on the corresponding coin in the neighbouring United States...

), 10¢ (dime
Dime (Canadian coin)
In Canada a dime is a coin worth ten cents. It is the smallest of the currently issued Canadian coins. According to the Royal Canadian Mint, the official national term of the coin is the 10 cent piece, but in practice the term dime is universal...

), 25¢ (quarter
Quarter (Canadian coin)
The quarter is a Canadian coin, valued at 25 cents or one-fourth of a Canadian dollar. It is a small, circular coin of silver colour. According to the Royal Canadian Mint, the official name for the coin is the 25-cent piece, but in practice it is simply called a quarter.-History of...

), 50¢ (50¢ piece
50 Cent Piece (Canadian coin)
The fifty-cent piece is the common name of the Canadian coin worth 50 cents. It is sometimes referred to as a "half dollar." The coin's reverse depicts the coat of arms of Canada. At the opening ceremonies for the Ottawa branch of the Royal Mint, held on January 2, 1908, Governor General Earl Grey...

) (though the 50¢ piece is rarely used in most provinces), $1 (loonie
Loonie
The Canadian 1 dollar coin is a gold-coloured, bronze-plated, one-dollar coin introduced in 1987. It bears images of a common loon, a bird which is common and well known in Canada, on the reverse, and of Queen Elizabeth II on the obverse.The design for the coin was meant to be a voyageur theme,...

), and $2 (toonie
Toonie
The Canadian 2 dollar coin, commonly called Toonie, was introduced on February 19, 1996 by Public Works minister Diane Marleau. The Toonie is a bi-metallic coin which bears an image of a polar bear, by Campbellford, Ontario artist Brent Townsend, on the reverse. The obverse, like all other current...

). The standard set of designs has Canadian symbols, usually wildlife, on the reverse, and an effigy of Elizabeth II on the obverse
Obverse and reverse
Obverse and its opposite, reverse, refer to the two flat faces of coins and some other two-sided objects, including paper money, flags , seals, medals, drawings, old master prints and other works of art, and printed fabrics. In this usage, obverse means the front face of the object and reverse...

. However, some pennies, nickels, and dimes remain in circulation that bear the effigy of George VI
George VI of the United Kingdom
George VI was King of the United Kingdom and the Dominions of the British Commonwealth from 11 December 1936 until his death...

. Commemorative coins with differing reverses are also issued on an irregular basis. 50¢ coins are rarely found in circulation; they are often collected and not regularly used in day-to-day transactions in most provinces. There have been repeated talks about removing the penny from circulation as it is estimated that it costs the Royal Canadian Mint up to four cents to produce and distribute a one-cent coin. The Canadian penny costs at least C$130 million annually to keep in circulation, estimates a financial institution that called for an end to the penny.
A 2007 survey shows that only 37% of Canadians use pennies but the government continues to produce about 816 million pennies per year, equal to 25 pennies per Canadian.

Banknotes

The first paper money issued in Canada denominated in dollars were British Army bills, issued between 1813 and 1815. Canadian dollar bank notes were later issued by the chartered banks
Banking in Canada
Banking in Canada is widely considered the most efficient and safest banking system in the world, ranking as the world's soundest banking system for the past three years according to reports by the World Economic Forum. Released at October 2010, Global Finance magazine put Royal Bank of Canada at...

 starting in the 1830s, by several pre-confederation
Canadian Confederation
Canadian Confederation was the process by which the federal Dominion of Canada was formed on July 1, 1867. On that day, three British colonies were formed into four Canadian provinces...

 colonial governments (most notably the Province of Canada
Province of Canada
The Province of Canada, United Province of Canada, or the United Canadas was a British colony in North America from 1841 to 1867. Its formation reflected recommendations made by John Lambton, 1st Earl of Durham in the Report on the Affairs of British North America following the Rebellions of...

  in 1866), and after confederation, by the Dominion of Canada starting in 1870. Some municipalities also issued notes, most notably depression scrip
Scrip
Scrip is an American term for any substitute for currency which is not legal tender and is often a form of credit. Scrips were created as company payment of employees and also as a means of payment in times where regular money is unavailable, such as remote coal towns, military bases, ships on long...

during the 1930s.

In 1935, with only 10 chartered banks still issuing notes, the Bank of Canada was founded. It took over the federal issuance of notes from the Dominion of Canada. It began issuing notes in denominations of $1, $2, $5, $10, $20, $25, $50, $100, $500 and $1000. In 1944, the chartered banks were prohibited from issuing their own currency, with the Royal Bank of Canada
Royal Bank of Canada
The Royal Bank of Canada or RBC Financial Group is the largest financial institution in Canada, as measured by deposits, revenues, and market capitalization. The bank serves seventeen million clients and has 80,100 employees worldwide. The company corporate headquarters are located in Toronto,...

 and the Bank of Montreal among the last to issue notes.

Significant design changes to the notes have occurred since 1935, with new series introduced in 1937, 1954, 1970, 1986, and 2001. The next series of notes is scheduled to be released in 2011. The design of these new notes was revealed to the public in June of 2011. The notes will be printed on a polymer
Polymer banknote
Polymer banknotes were developed by the Reserve Bank of Australia , Commonwealth Scientific and Industrial Research Organisation and The University of Melbourne and were first issued as currency in Australia in 1988. These banknotes are made from the polymer biaxially-oriented polypropylene ...

 substrate instead of cotton fibre.

All banknotes are currently printed by the Canadian Bank Note Company
Canadian Bank Note Company
The Canadian Bank Note Company is a Canadian security printing company. It is probably best known for being one of two private companies holding contracts with the Bank of Canada to supply it with Canada's paper currency. The company's other clients include private businesses, national and...

 and BA International Inc, under contract to the Bank of Canada
Bank of Canada
The Bank of Canada is Canada's central bank and "lender of last resort". The Bank was created by an Act of Parliament on July 3, 1934 as a privately owned corporation. In 1938, the Bank became a Crown corporation belonging to the Government of Canada...

.

Legal tender

Canadian dollar banknotes issued by the Bank of Canada are legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....

 in Canada. However, commercial transactions may legally be settled in any manner agreed by the parties involved.

Legal tender of Canadian coinage is governed by the Currency Act
Currency Act
The Currency Act is the name of several acts of the Parliament of Great Britain that regulated paper money issued by the colonies of British America. The acts sought to protect British merchants and creditors from being paid in depreciated colonial currency...

, which sets out limits of:
  • $40 if the denomination is $2
    Toonie
    The Canadian 2 dollar coin, commonly called Toonie, was introduced on February 19, 1996 by Public Works minister Diane Marleau. The Toonie is a bi-metallic coin which bears an image of a polar bear, by Campbellford, Ontario artist Brent Townsend, on the reverse. The obverse, like all other current...

     or greater but does not exceed $10;
  • $25 if the denomination is $1
    Loonie
    The Canadian 1 dollar coin is a gold-coloured, bronze-plated, one-dollar coin introduced in 1987. It bears images of a common loon, a bird which is common and well known in Canada, on the reverse, and of Queen Elizabeth II on the obverse.The design for the coin was meant to be a voyageur theme,...

    ;
  • $10 if the denomination is 10¢ or greater but less than $1;
  • $5 if the denomination is 5¢;
  • 25¢ if the denomination is 1¢.


Retailers in Canada may refuse bank notes without breaking the law. According to legal guidelines, the method of payment has to be mutually agreed upon by the parties involved with the transactions. For example, convenience stores may refuse $100 bank notes if they feel that would put them at risk of being counterfeit
Counterfeit
To counterfeit means to illegally imitate something. Counterfeit products are often produced with the intent to take advantage of the superior value of the imitated product...

 victims; however, official policy suggests that the retailers should evaluate the impact of that approach. In the case that no mutually acceptable form of payment can be found for the tender, the parties involved should seek legal advice.

Canadian dollars, especially coins, are accepted by some businesses in the northernmost cities of the United States and in many Canadian snowbird
Snowbird (people)
The term snowbird is used to describe people from the U.S. Northeast, U.S. Midwest, or Canada who spend a large portion of winter in warmer locales such as California, Arizona, Florida, Texas, the Carolinas, or elsewhere along the Sun Belt region of the southern and southwest United States,...

 enclaves, just as US dollars are accepted by some Canadian businesses.

Value

Unlike other currencies in the Bretton Woods system
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...

, whose values were fixed
Fixed exchange rate
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.A fixed exchange rate is usually used to...

, the Canadian dollar was allowed to float
Floating exchange rate
A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency....

 from 1950 to 1962. Between 1952 to 1960, the Canadian dollar traded at a slight premium over the US dollar, reaching a high of US$1.0614 on August 20, 1957.

The Canadian dollar fell considerably after 1960, and this contributed to Prime Minister John Diefenbaker
John Diefenbaker
John George Diefenbaker, PC, CH, QC was the 13th Prime Minister of Canada, serving from June 21, 1957, to April 22, 1963...

's defeat in the 1963 election
Canadian federal election, 1963
The Canadian federal election of 1963 was held on April 8 to elect members of the Canadian House of Commons of the 26th Parliament of Canada. It resulted in the defeat of the minority Progressive Conservative government of Prime Minister John Diefenbaker.-Overview:During the Tories' last year in...

. The Canadian dollar returned to a fixed exchange rate
Fixed exchange rate
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime wherein a currency's value is matched to the value of another single currency or to a basket of other currencies, or to another measure of value, such as gold.A fixed exchange rate is usually used to...

 regime in 1962 when its value was set at US$0.925, where it remained until 1970.

As an inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

-fighting measure, the Canadian dollar was allowed to float in 1970. Its value appreciated and it was worth more than the US dollar for part of the 1970s. The high point was on April 25, 1974, when it reached US$1.0443.

The Canadian dollar fell in value against its American counterpart during the technological boom
Dot-com bubble
The dot-com bubble was a speculative bubble covering roughly 1995–2000 during which stock markets in industrialized nations saw their equity value rise rapidly from growth in the more...

 of the 1990s that was centred in the United States, and was traded for as little as $0.6179¢ US on 21 January 2002, which was an all-time low. Since then, its value against all major currencies has risen due, in part, to high prices for commodities (especially oil
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

) that Canada exports.

The CAD's value against the US dollar rose sharply in 2007 because of the continued strength of the Canadian economy and the US currency's weakness on world markets. During trading on September 20, 2007 it met the US dollar at parity for the first time since November 25, 1976.

Inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

 in the value of the Canadian dollar was fairly low since the 1990s, but had been severe for some decades before that. In 2007 the Canadian dollar rebounded remarkably, soaring 23% in value.

On September 28, 2007, the Canadian dollar closed above the US dollar for the first time in 30 years, at US$1.0052.
On November 7, 2007, it hit US$1.1024 during trading, a modern-day high
after China announced it would diversify its US$1.43 trillion foreign exchange reserve away from the US dollar. (The dollar has been as high as US$2.78, reached on 11 July 1864 after the United States had temporarily abandoned the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...

.) By November 30, however, the Canadian dollar was once again at par with the US dollar, and on December 4, the dollar had retreated back to US$0.98, through a cut in interest rates made by the Bank of Canada due to concerns about exports to the US.

Due to its soaring value and new record highs, the Canadian dollar was named the Canadian Newsmaker of the Year
Canadian Newsmaker of the Year (Time)
The Canadian Newsmaker of the Year is a designation awarded by the Canadian edition of Time magazine. It comes with a written piece reflecting the magazine's staff's opinion on which Canadian or Canadians have had the most impact on the news, either positively or negatively...

 for 2007 by the Canadian edition of Time
Time (magazine)
Time is an American news magazine. A European edition is published from London. Time Europe covers the Middle East, Africa and, since 2003, Latin America. An Asian edition is based in Hong Kong...

magazine.

Since 84.2% of Canada's exports go and 56.7% of imports into Canada come from the US Canadians are interested in the value of their currency mainly against the US dollar. Although domestic concerns arise when the dollar trades much lower than its US counterpart, there is also concern among exporters when the dollar appreciates quickly. The rapid rise in the value of the dollar increases the price of Canadian exports to the US. On the other hand, there are advantages to a rising dollar, in that it is cheaper for Canadian industries to purchase foreign material and businesses.

The rise in value has affected the book and book publishing industry, where buyers have been accustomed to fixed prices on the backs of their books: one for the Canadian market and another one for the American market.

The Bank of Canada has no specific target value for the Canadian dollar and has not intervened in foreign exchange market
Foreign exchange market
The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...

s since 1998. The Bank's official position is that market conditions should determine the worth of the Canadian dollar, although the BoC occasionally makes minor attempts to influence its value.

On world markets, the Canadian dollar historically tended to move in tandem with the US dollar. An apparently rising Canadian dollar (against the US dollar) was decreasing against other international currencies; however, during the rise of the Canadian dollar since 2002, it has gained value against the US dollar as well as other international currencies. In recent years, dramatic fluctuations in the value of the Canadian dollar have tended to correlate with shifts in oil prices, reflecting the dollar's status as a petrocurrency
Petrocurrency
Petrocurrency is a portmanteau neologism used with three distinct meanings, though often confused:#Trading surpluses of oil producing nations, originally called petrodollars...

 owing to Canada's significant oil exports.

Reserve currency

A number of central banks (and commercial banks) keep Canadian dollars as a reserve currency
Reserve currency
A reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions as part of their foreign exchange reserves...

. The Canadian dollar is considered to be a benchmark currency.

In the economy of the Americas, the Canadian dollar plays a similar role to the one that the Australian dollar
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...

 (AUD) does in the Asia-Pacific
Asia-Pacific
Asia-Pacific or Asia Pacific is the part of the world in or near the Western Pacific Ocean...

 region. The Canadian dollar (as a regional reserve currency for banking) has been an important part of the British, French and Dutch Caribbean state's economies and finance systems since the 1950s. The Canadian dollar is held by many central banks in Central America and South America as well. The holding of the Canadian dollar in Latin America is done so because of each nation's nationally important issues of remittances and international trade.

By observing how the Canadian dollar behaves against the US dollar, foreign exchange economists can indirectly observe internal behaviours and patterns in the US economy that could not be seen by direct observation. The Canadian dollar has fully evolved into a global reserve currency only since the 1970s, when it was floated against all other world currencies. Some economists have attributed the rise of importance of the Canadian dollar to the long term effects of the Nixon Shock
Nixon Shock
The Nixon Shock was a series of economic measures taken by U.S. President Richard Nixon in 1971 including unilaterally cancelling the direct convertibility of the United States dollar to gold that essentially ended the existing Bretton Woods system of international financial exchange.-Background:By...

 that effectively ended the Bretton Woods system
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...

 of global finance.

The Canadian dollar is used as a reserve currency around the world and is currently ranked 6th in value held as reserves.

Concerns about the United States of America's increasing debt levels in recent years have caused the Canadian dollar to become more widely held as an international reserve currency, as countries try to decrease their US dollar-denominated reserves.

See also

  • Economy of Canada
    Economy of Canada
    Canada has the tenth largest economy in the world , is one of the world's wealthiest nations, and is a member of the Organization for Economic Co-operation and Development and Group of Eight . As with other developed nations, the Canadian economy is dominated by the service industry, which employs...

  • Canadian Bank Note Company
    Canadian Bank Note Company
    The Canadian Bank Note Company is a Canadian security printing company. It is probably best known for being one of two private companies holding contracts with the Bank of Canada to supply it with Canada's paper currency. The company's other clients include private businesses, national and...


External links

Bank of Canada

Other
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