However from mid 1980s the most striking manifestation of undermining existing for many decades, the division of functions between the “four pillars” of canadian Finance and credit expansion becomes turbulent in the country of a totally new type of Canada financial institutions – a widely diversified investment banking firm, or, in the terminology of canadian specialists, “trading Bank”.
The rapid development of this type of financial institutions largely due to the fact that “the trade Bank” almost not covered under existing legislation regulating the area of Finance in Canada, and primarily under laws restricting the rights of investors to buy large (over 10%) packages of voting shares of financial companies. Thus, the penetration of credit and financial markets through the agencies of its kind in the highest degree beneficial to the largest groups of monopolistic capital, having the appropriate tools to completely dispose of large organizations “financial ownership” of such companies. They rely on aggregate economic and financial capacity of all financial institutions controlled by them, and use the already established network of clientele, their market knowledge, management experience, etc.
The first and largest investment banking firm in Canada was the Corporation “hiz international Corp.” – part of the huge possessions of the family of Edward and Peter Bronfman. Another example of “trading Bank” can serve as a “Central capital management Inc.”, separated from holding “Central capital Corp”. Its chief possession is one of the largest canadian trust companies “Central trust”. All the financial institutions group in control of two large canadian businessman R. Cohen and D. Ellen. Own “commercial Bank”, “Lancaster finanl Inc.” organized by the financial conglomerate “Crewnecks Inc.” (the Central link is a large insurance company “crown of life a haven of rest and relaxation”).
If in 1985 the country has only one such establishment, in 1988 there were already about a half dozen, and this number is constantly increasing. “Trade the banks” gemmated from literally all of the largest diversified companies in the field of Finance. The formation of financial conglomerates from different financial companies is a major feature of centralization of capital in credit and financial sphere of Canada.
Savings banks in Canada has not received such a large spread as in the USA. They develop mainly in Quebec and controlled by “family” groups of the French capitalists. Moneys received by them of the population are invested in government bonds.
The most important role in the development of banking executives canadian financial capital has played a banking law. Special studies conducted in Canada, showed convincingly that the country’s banking system is always securely protected from competition from other financial sectors and financial institutions under foreign control. As a result of this protection, the banks were able to extract high monopoly profits.
Widely used financial capital of Canada in their interests and the device administrative regulation (regulation) in various industries and spheres of economy. This primarily refers to the regulation of securities market (shares and bonds) of corporations. So, a number of special acts regulating the securities market (this area is under the jurisdiction of the provinces), complements the action of the tax laws in the direction of further concentration and centralization of capital in the country.
In particular, corporations incorporated in Ontario are covered by the rule that when buying a “foreign shareholder” of 20% or more of the voting shares of the company at a price exceeding the market average by 15% (this is typical at the conclusion of the transaction between a large buyer and large seller in the face of leading corporations of Canada), it must offer the same “best” price all other owners of small packets. Thus, the law often compels a Corporation, just who planned a major capital investment in shares completely to absorb a particular company.
Among other laws regulating the securities market, notably the little known position on the structure of investments of pension funds in Canada. Throughout the postwar period, the canadian pension savings funds were obligated at least 90% of all funds to invest in stocks and bonds only canadian firms. Being provided as a means of stimulating economic development of Canada”, this measure has played an invaluable role in the process of concentration of economic power in the country.
An important feature of the canadian economy is its very close ties with the U.S. economy: about 20% is produced in Canada, products are exported to the USA, and the financial markets of these two countries ‘ highly integrated. The second feature that distinguishes Canada from most other industrialized countries is a high share of extractive industries in gross domestic product. Since raw material accounts for a significant proportion of exports, the terms of trade for Canada is always better during periods of rising world prices for raw materials and deteriorate during periods of falling.
Monetary and foreign exchange policy of Canada is aimed at strengthening the national currency, which is achieved by means of control over inflation and stabilizing the exchange rate of the canadian dollar. For this purpose, the Bank of Canada sets targets for inflation for 3-5 years and carries out intervention in currency markets in exchange for foreign currency.
Also, at the present stage the main instrument of monetary policy in Canada is to move the deposits belonging to the government, commercial banks and other clearing institutions in the Bank of Canada is a “seizure” (drawdown), as well as in clearing banks – “redeposit” (redeposit). In General, the latest trends in foreign exchange and monetary policy of Canada demonstrated the interest of bodies monetary-credit regulation in the preservation of its influence on the formation of the basic proportions of foreign trade and exchange patterns in exchange rates, the commitment to fight inflation and ensure this through sustainable economic growth.