From its earliest days, the Bank has maintained close links with Canada's major financial institutions. Together with these institutions, the Bank operates the nation's bank note distribution system and monitors notes in circulation to ensure optimal quality.
In response to concerns about counterfeiting, the Bank also offers various training programs and materials designed to help financial institutions recognize the security features of genuine notes.
Beginning in the late 1990s, the Bank introduced a new kind of bank note distribution system, one in which financial institutions exchange notes directly with one another at locations across the country. They communicate with the Bank through a computerized inventory-management system.
See also: "The new bank note distribution system," Bank of Canada Review, Summer 1997.
An article on helpful counterfeit detection techniques for cash-handlers is also available in PDF format.
The Bank distributes new and used bank notes to financial institutions, which then distribute them to their own branch network, other financial institutions, retailers, and ultimately the public. Bank notes that are returned to the financial institutions as deposits are recirculated if they are judged to be of good quality. The rest are returned to the Bank of Canada.
To be considered fit, a note must be able to withstand the wear and tear of everyday use in circulation, and its security features must be functional.
The speed with which different denominations of bank notes change hands among consumers and businesses varies — so too does the average life of different bank note denominations:
|$ 5:||1 to 2 years|
|$ 10:||1 to 2 years|
|$ 20:||2 to 4 years|
|$ 50:||4 to 6 years|
|$100:||7 to 9 years|
The lowest denominations are used most frequently and therefore do not last as long as higher denominations. The Bank has recently focused on improving the durability of bank note paper and hence the longevity of circulating notes.