- 11 functioning while assuming very limited risk. If firms could assume that this traditional form of liquidity provision from the Fed was available in their stress-planning scenarios, the liquidity characteristics of Treasury securities could be the same as reserves, and both assets would be available to meet same-day needs. There are a variety of ways we could achieve this outcome.
In consequence, the Bank of Canada Act was amended in 1967 to provide the Minister of Finance with the right to issue a directive to the Bank if the government disapproved of the Bank’s policy. Thus, the government is ultimately responsible for monetary policy, but if no directive is issued the Bank has full responsibility for designing and implementing monetary policy.