About the Canadian Dollar
The Canadian dollar is the currency of Canada, issued by the Bank of Canada. It has floated freely since 1970, so its value is set by the market rather than pegged to another currency. It is often called the "loonie", after the bird on the one-dollar coin.
Canada is one of the world's largest producers of oil, and a big exporter of metals, timber and grain, so CAD tends to move with commodity prices. The United States buys most of Canada's exports, which makes USD/CAD by far the most traded CAD pair and one of the most liquid currency pairs in the world.
The Bank of Canada targets 2% inflation and sets its policy interest rate on eight fixed dates a year. Those announcements, along with US interest rate decisions and oil prices, are what usually move the exchange rate.
Paying in CAD
- No IBAN in Canada
- Canada does not use IBANs. A Canadian account is identified by a 3-digit institution number (the bank), a 5-digit transit number (the branch) and the account number. For electronic payments the first two are often combined into a 9-digit routing number: 0, then the institution number, then the transit number.
- Receiving from abroad
- Payments from abroad arrive over SWIFT. Ask the recipient for their bank's SWIFT/BIC code as well as the institution, transit and account numbers.
- Domestic clearing
- Inside Canada, large-value payments settle through Lynx, the system Payments Canada launched in 2021, and everyday transfers clear through its batch system.
- Reporting threshold
- Canadian banks report incoming and outgoing international transfers of CAD 10,000 or more to FINTRAC, Canada's financial intelligence agency. Have the purpose of the payment ready.
- Bank holidays
- Canadian bank holidays differ from US and UK ones: Canada Day (1 July), Victoria Day (May) and Thanksgiving (second Monday of October) all close Canadian banks and can push back value dates.
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