As banks were established in Canada in the early 1800s, they issued their own notes, as did various governments and even merchants. In central Canada, the efforts of the growing financial community to solve the problem of currency were complicated by a loss of "hard" currency (gold and silver coins) to the United States with an increase in cross-border trade. As a result, sentiment in favour of a national currency increased.
Following Confederation in 1867, Parliament confirmed its control of currency with legislation and began to issue Dominion of Canada notes. Notes issued by both the government and the chartered banks were in common use for many years, until (and for a transitional period after) the Bank of Canada was created in 1934 and given sole responsibility for issuing paper currency in Canada.
Learn more: The National Currency Collection