News Releases

TORONTO, March 10, 2010 - BMO Financial Group, Canada's first bank and, until 1935, Canada's de facto central bank, extended birthday greetings to its successor in the role, the Bank of Canada. Seventy-five years ago tomorrow, the Bank of Canada took over from Bank of Montreal as banker to the Government of Canada.

"In Canada, we have been fortunate to have a long succession of strong and able governors of the central bank," said Bill Downe, President and Chief Executive Officer, BMO Financial Group. "Under their leadership, we've had the benefit of a predictable and effective monetary policy that has had a significant and positive impact on the strength of our economy."

For 117 years before that, Bank of Montreal had been the banker in Canada for both the Imperial and the provincial governments, and the principal source of foreign exchange for both government and private enterprise; from 1893 on, it had acted as the federal government's fiscal agent in London, in which capacity it had also been the virtual manager of the public debt.

The Royal Commission that in 1933 recommended creation of the Bank of Canada recognized the important role Bank of Montreal had played up to that point, noting that it had been "a ready source of skilled and impartial financial advice at the disposal of the administration of the day."

Bank of Montreal, like other chartered banks, also issued its own banknotes and, for a short time, government-issued banknotes were countersigned by Bank of Montreal. Shortly after Confederation, the federal government assumed exclusive right to issue notes below the value of four dollars, but the chartered banks continued to issue bills of larger denomination. It was not until the Bank of Canada was established that the practice of issuing private currency was phased out, and Bank of Montreal issued its last five dollar bill in 1942 [see photo].