Bank Of Canada provide security to the banking system in the
following ways:
Reserve funds: Bank of Canada decides the reserve funds the
commercial banks has to hold with them all the time. This funds
will be a proportion of the total saving and current account
deposits made in the banking system. This is done with the motive
to prevent a bank run and save the interest of people.
It makes rules and regulations like the amount of capital the
banks should hold all the time. It includes provisions like Capital
Adequacy Ratio, Following Basel norms etc. Bank of Canada also
makes rule related to priority sector lendings in the economy.
Control credit and money supply in the economy apart from
lending to the banks and acting as a lender of last resort. Bank of
Canada regulates every movement of the commercial banks working in
Canada.