CHAPTER II
Bank of Canada Objectives
BEFORE DISCUSSING the Bank of Canada's control techniques or its operations, it is essential that we gain a clear impression of what exactly the Bank should attempt to do. The objectives described in this chapter are perhaps not in every case beyond dispute, especially since it has been necessary to make certain assumptions regarding the extent of the Bank's responsibility for debt management and government finance; but much of the discussion should be noncontroversial, for appraisals of whether or not the Bank of Canada has fulfilled these objectives are left to later chapters. Similarly it seems best to leave most discussion of control techniques to the next chapter. The emphasis is entirely on Bank objectives, although some description of the economic phenomena which make certain objectives necessary must occasionally be given.

It has already been indicated in chapter I that the Bank is the instrument for implementing government policy, and therefore it might be said that the ultimate objective of the Bank's operations is the fulfilment of this policy. While this is undoubtedly correct, indeed a truism, it tells us nothing of the nature of the Bank's specific objectives and so gives no indication of the general guides for actual operations. The attainment of a high and stable level of employment income and economic growth can be considered to be the Bank's ultimate objective, and that is the expressed aim of the government also. 1 The Bank can attempt to achieve this aim by both direct and indirect means. Directly, it can try to bring a positive influence to bear on national income itself; that is, it can encourage a change in real and money national income. More indirectly, it can accommodate a change in national income which is already taking place and it can in certain ways protect the economy from influences which would disrupt economic growth and price stability; we will find that these activities mainly entail offsetting changes in the demand for bank cash, and exerting a stabilizing influence on the securities and foreign exchange markets. Lastly, since governments will not be without funds, the Bank may have to aid government finance.