Finance Canada
Glossary of Frequently-Used Terms


Index: A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U-Z.

balance of payments or international balance of payments (balance des paiements ou balance des paiements internationaux).

An accounting of all the economic transactions between one country and the rest of the world over a given period. It is composed of the current account and the capital account. In principle, the current account and capital account should balance each other out. If Canada buys more goods, services and the like than it sells (i.e. has a current account deficit), it has to sell its assets, or go into debt, to finance the spending (i.e. run a capital account surplus). In theory, therefore, the balance of payments is always zero. Because so much economic activity now involves financial or monetary transactions, a country's balance of payments provides a good picture of its international transactions.

balance of trade (balance commerciale).

The difference between the value of the goods and services that a country exports and the value of the goods and services that it imports. If a country's exports exceed its imports, it has a trade surplus; if imports exceed exports, the country has a trade deficit.

bank (banque).

A federally regulated financial institution that, in general, engages in the business of taking deposits, lending, and providing other financial services.

Bank for International Settlements (BIS) (Banque des règlements internationaux (BRI)).

A central banking institution owned and controlled by central banks, with a board comprising the governors of the central banks of the Group of Ten countries. The BIS has become an important forum for international monetary and financial co-operation between central bankers and, increasingly, other regulators and supervisors. For more information, visit the Bank for International Settlements Web site.

Bank of Canada (Banque du Canada).

Canada's central bank. It is responsible for Canadian monetary policy, issuing bank notes, regulating and supporting Canada's principal systems for clearing and settling payments, and acting as fiscal agent for federal government debt. For more information, visit the Bank of Canada Web site.

bank rate (taux d'escompte).

The minimum lending rate of the Bank of Canada. It is applied to advances to institutions that are members of the Canadian Payments Association, and to purchase and resale transactions with key investment dealers in the money market. It is also the primary indicator of Bank of Canada monetary policy. The bank rate is an important tool because it is seen as the trend-setter for other short-term interest rates. Changes in the bank rate often lead to changes in the prime rate, which is the rate of interest that commercial banks charge to their lowest-risk customers. Other rates can be affected including those for mortgages, cars and business loans, as well as rates paid to savers on deposits and investment certificates.

bankers' acceptance (acceptation bancaire).

Short-term negotiable commercial paper issued by a non-financial corporation but guaranteed by a bank.

basis point (point de base).

One one-hundredth of a percentage point. If the bank rate decreased from 5.45% to 5.35%, it went down 10 basis points.

Basle Committee on Banking Supervision (Comité de Bâle sur le contrôle bancaire).

A committee of banking supervisory authorities established by the governors of the central banks of the Group of Ten countries in 1975. The committee provides a forum for regular co-operation between its member countries on banking supervisory matters. For more information, visit the Bank for International Settlements Sponsoring Committees Web page.

benchmark bond (obligation de référence).

Specific issue outstanding within each class of bond maturity. It is considered by the market to be the standard against which all other bonds issued in that class are evaluated.

bid (cours acheteur).

Price a buyer is ready to pay for a given asset (e.g. stocks, bonds). The bid-offer spread is the difference between the bid and offer prices.

borrowing authority (pouvoir ou autorisation d'emprunter).

The legislative authority requested from Parliament for the fiscal year to go to the private market to borrow funds. It has traditionally been tied to the financial requirement forecast for that year, adjusted for estimated Exchange Fund earnings.

budgetary spending (dépense budgétaire).

The spending over which the federal government has responsibility.
See also non-budgetary spending.

budgetary transaction (opération budgétaire).

Transaction that affects the net indebtedness of the government.
See also non-budgetary transaction.

business cycle (cycle économique).

The succession of periods of recession and recovery. Economic activity tends to fluctuate: periods when real gross domestic product (GDP) is falling are called recessions; periods when real GDP is rising are called recoveries.

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