The Canadian dollar

How the colonies ended up with dollars

The 1850s in British North America were a decade of argument between pounds, shillings and pence and a decimal system built on the US dollar. London wanted sterling throughout the empire. The provinces traded more and more with the United States and wanted money that matched it.

The Province of Canada had adopted a Canadian pound in 1841 worth four US dollars. A gold standard followed in 1853, with the British sovereign legal tender at £1 = US$4.86⅔, and in 1857 the province chose a decimal coinage on the US dollar unit. The coins arrived in 1858. New Brunswick and Nova Scotia followed in 1860. Newfoundland went decimal in 1865 on the Spanish dollar instead, and until 1895 its dollar was worth slightly more than Canada's. British Columbia adopted its own dollar at par in 1865 and gave it up for the Canadian one on joining Canada in 1871, and Prince Edward Island's decimal currency of 1871 lasted two years before the island joined too.

Confederation in 1867 united the Province of Canada, New Brunswick and Nova Scotia, and their currencies merged. Parliament's Uniform Currency Act of April 1871 finished the job with one Canadian dollar for every province.

Who prints and strikes Canadian money

For decades the chartered banks issued their own dollar notes, from the 1830s onward, beside government notes from 1870. The Bank of Canada began operations in March 1935 as the sole issuer of federal notes, and its first series went into circulation on the day it opened, including a $25 note marking the Silver Jubilee of George V. The chartered banks lost the right to issue in 1944. The Canadian Bank Note Company of Ottawa has printed every note since 1935 under contract, alone since a second printer left the business at the end of 2012.

The Royal Canadian Mint makes the 5¢, 10¢, 25¢, $1 and $2 coins at its plants in Winnipeg and Ottawa. A 50¢ coin exists but is sold only by the mint and barely circulates. Under the Currency Act a payment in coins is legal tender only up to a limit set by denomination, from 25 cents in pennies to $40 in coins of $2 or more.

How the dollar left fixed rates behind

The gold standard lapsed during the First World War and was abolished on 10 April 1933. When the Second World War began, the government fixed the dollar at Can$1.10 to the US dollar, moved it to parity in 1946 and back to 1.10 in 1949 when Britain devalued the pound. Canada floated the dollar in September 1950. The float lasted until 1962, when a new peg set one Canadian dollar at US$0.925, and that peg held until 1970. The dollar has floated since then.

Why the penny and some notes lost out

The Royal Canadian Mint struck its last penny on 4 May 2012, and distribution stopped on 4 February 2013. Cash totals have been rounded to the nearest five cents ever since; the penny remains legal tender and is accepted but never given as change. Silver had left the coinage earlier, and 1968 was the last year Canada issued circulating silver coins.

On 1 January 2021 the $1, $2, $25, $500 and $1000 notes stopped being legal tender. Paper notes of every older series count as unfit for circulation, so banks send them back to the Bank of Canada to be destroyed, while individuals may keep them. The polymer notes that replaced them came out between 14 November 2011, with the $100, and 12 November 2013, with the $5 and $10.

Where the loonie got its name

A $1 coin of aureate-plated nickel replaced the dollar bill in 1987. It carried a common loon on the reverse, and English speakers called it the loonie; French speakers use huard, the French word for the bird. The bimetallic $2 coin of 1996 became the toonie. Older slang survives too. Buck goes back to a Hudson's Bay Company coin of the seventeenth century worth the pelt of a male beaver, and Canadian French still calls a quarter trente sous.