|Entrance to the Bank of Canada Museum|
Photo by Lisa Haley
|Our tour group in the museum's foyer|
How does the Bank of Canada control inflation?When inflation is rising quickly, we can feel unsure about the value of our money. The Bank helps by aiming to keep inflation low, stable and predictable. Like an astronaut carefully steering a rocket to a distant target, the Bank aims to maintain future inflation at 2%. This strategy is called inflation targeting. To hit the objective, the Bank analyzes (sic) economic data to form a forecast. This helps it adjust the interest rate at which commercial banks borrow and lend among themselves. Each adjustment takes time to ripple through financial markets and moves inflation toward the target rate.The entrance tunnel to the galleries was all flashing blue lights like this summer's Kontinuum show, a block away from here (now closed).
Displays in the museum's first gallery (Zone 2, where you can "discover your expectations") showed
- what can be done with money (save it, buy shares with it, or spend it). Apparently, the future is what drives our spending choices: the more optimistic we feel, the more we spend. As a company director, for instance, we might want to spend more or infrastructure, supplies and hire more staff, in the hope of positive outcomes.
- how Canada fits into the global economy
- the functions of Canada's central bank
A timeline showing the history of money was shown along one wall of "Zone 3", from 5400 BC (in Mesopotamia) onward. Our guide pointed out to our women's group how influential women were, during Canadian history at least, how they effectively controlled Canada's wartime economy, for example, while the men were away fighting. How lonely women took out Dominion of Canada war loans, like the $100 5% Victory Bonds "... pour que bientôt il me revienne." (I'm not sure I could have followed that 1940s' train of thought.)
An interesting display in one cabinet was of paper money giving evidence of runaway inflation in the past, from countries such as Mexico, Uganda, China, Viet Nam (sic), Turkey, Brazil and, of course, Germany, with their 50-million Mark bills of the 1930s. From Zimbabwe there was even a ridiculous, 100 trillion dollar bill.
Other unusual bills were pound notes from The States of Guernsey, the Isle of Man and the Royal Bank of Scotland, all different from a standard £ note. They had a 20 centisimos note from Montevideo, inscribed Banco de Londres y Rio de la Plata, 1865.
In another gallery, were the objects of value used for trading in the past, money substitutes. A long twisted rod from Guinea had been made by a shaman, adding the soul of a person who had died. Its value depended on the value of the soul! If you broke the rod, woe betide you; the value was lost. In the old days, fabrics were used for exchanges between European traders and the chiefs of African tribes. Then there were the blocks of salt given as "salary" (salarium) for Roman soldiers, the salt being used to rub on wounds or to preserve meat. So we spoke of the symbolic worth of things, including gold. The more primitive peoples used beans, shells, beads as tender, and even wild boar tusks (teeth) — in the outback of Australia.
Nowadays too, there are money substitutes, such as the Oyster card for London transport.
In Canada, the banks originally printed their own money; later there were some "ghost banks" that only did this. However from 1935 onward Canada had its central bank, and in the present day, notes are printed at a secret location by the Canadian Bank Note Company (whose head office is on Richmond Road). They print our passports, too. The material used, which can't be torn unless you cut it with scissors, is polymer, polymer substrate being imported from Australia for the purpose. We watched a demonstration of how to tell a fake note from a genuine one. Look in particular at the holograms, and check for breaks in the smoothness of the banknote's surface. If you hold a genuine modern banknote up to the light, you will see small maple leaves in the top left corner.
The images on the money we use "reflect who we are" as Canadians. Soon, the face of a black, female entrepreneur (Viola Desmond) will be featured on one of our new $10 notes. At the game station in this last zone, visitors can design banknotes with their own faces, but they won't be legal tender.