The unique contribution of the Bank of Canada in maintaining the stability of the financial system stems from it capacity to
A) provide deposit insurance.
B) conduct fiscal policy.
C) function as a lender of last resort.
D) make loans directly to the public.
E) pass banking legislation without government approval.

Question

Quizplus · Accepted Answer

The function of a lender of last resort is to provide liquidity to financial institutions in times of crisis, which helps maintain the stability of the financial system. The Bank of Canada has the capacity to function as a lender of last resort, making it an important player in the financial system but it does not provide deposit insurance, conduct fiscal policy or make loans directly to the public. It also cannot pass banking legislation without government approval.

The Unique Contribution of the Bank of Canada in Maintaining