Funds Management: The Government’s Bank Account

Where does the government keep its money? At the Bank of Canada. The Bank also ensures that the government has enough money to meet its daily needs and is able to provide the services you rely on. Learn about the Bank’s role as the government’s banker.

Discussion guide

After you’ve watched this video with your students, use this guide to explore key concepts and lead a discussion.

Key concepts

• The Bank of Canada handles the federal government’s money.
• The Bank of Canada also helps forecast how much money the government needs for its own spending.

Group discussion

Ask the following questions.

Why does the government need its own banker?

The government needs a bank just like you do. It needs a place to store the money it receives from taxes and other sources. But it also needs help directing and investing income and managing debt. The Bank of Canada handles the government’s money to make sure there is always enough on hand to pay for the services it delivers to Canadians.

What types of things does the government need money for?

Different levels of government—federal, provincial and municipal (cities and towns)—are responsible for paying for different things, and each level has its own taxes. Some of the provincial and municipal money also comes down from federal government income as transfer payments to help fund their programs. This money pays for various things in society, such as health care, education, roads, police, welfare, old-age pensions, the military and infrastructure like bridges and sewers. But the list is longer—it may also include supporting the arts, small businesses, sports and cultural institutions, like museums.

Why doesn’t the government manage its own money?

Typically, governments are in office from four to eight years, and their ministers may change many times. Federal government funds need to be managed away from the influence of the political process, which often has very short-term interests. The Bank of Canada is a “crown corporation.” Crown corporations are owned by the government but are not controlled by the government. The Bank of Canada executes long-term plans to maintain a healthy economy, free from political influence. The money is, after all, Canadians’ money—regardless of who is in office.