Financial markets consist of markets for money, bonds, equities, derivatives, and foreign exchange. They are one of the three elements of Canada's financial system. It is mainly through the financial markets that the Bank's key policy rate influences interest rates and the exchange rate. This, in turn, helps the Bank achieve its monetary policy objectives.
The Bank is also involved in financial markets through auctions of government securities. On rare occasions, the Bank may also intervene in the foreign exchange market on behalf of the government to promote orderly markets for the Canadian dollar.
The Bank conducts wide-ranging research to strengthen its understanding of the structure of the Canadian financial system and to identify how the Bank can encourage the development and stability of Canadian markets.