1. What policy does the Bank of Canada follow when the Canadian dollar is strong?
2. What policy does the Bank of Canada follow when the Canadian dollar is weak?
3. What effect does holding gold currency have on the economy?
would the first be monetary policy?
i found #1 and #3, but i cant find number 2
Eva/Sai -- why did you switch names?
This site may help you.
http://www.canadianbusiness.com/economy/why-the-bank-of-canada-is-just-fine-with-a-weaker-loonie/
Yes, the policies followed by the Bank of Canada in response to a strong or weak Canadian dollar would typically fall under monetary policy.
When the Canadian dollar is strong:
1. The Bank of Canada may take measures to lower interest rates to stimulate borrowing and investment, making Canadian exports more affordable and boosting economic growth.
2. They may also intervene in foreign exchange markets to sell Canadian dollars, thereby increasing the supply of Canadian dollars and potentially weakening its value.
When the Canadian dollar is weak:
1. The Bank of Canada may increase interest rates in order to attract foreign investment, which can help strengthen the Canadian dollar.
2. They may refrain from intervening in foreign exchange markets or may even consider interventions to buy Canadian dollars to stabilize its value.
Regarding the effect of holding gold currency on the economy, it can potentially have several impacts:
1. Gold is often considered a safe-haven asset during times of economic uncertainty or financial instability. Holding gold can help protect against inflation or other risks to the economy.
2. As a store of value, gold can provide stability to a country's currency and help maintain confidence in the monetary system.
3. However, excessive accumulation of gold reserves may divert resources away from other productive investments in the economy.
4. Additionally, the value of gold can fluctuate, which can impact exchange rates and affect the competitiveness of a country's exports.
It's worth noting that different countries may have different policies and approaches to these situations, so the specific actions taken by the Bank of Canada regarding monetary policy and gold currency may vary.