10 Facts About the Canadian Dollar

Nicknamed the “loonie”, the Canadian dollar holds a prominent place both nationally and internationally. From its colonial roots to its role in currency markets, this currency has many fascinating aspects.

Are you writing an article on the Canadian dollar or simply curious to learn more about it? In this piece, we present 10 interesting facts about Canada’s official currency.

Key Takeaways: 

• Historical and colonial origins: The Canadian dollar traces its roots back to barter and the early use of playing cards as makeshift currency in the 17th century, before becoming official with Confederation in 1867.

• Close link with the US dollar: Adopted in 1858, the Canadian dollar was modelled on the US system, using a decimal format that made trade with its main partner, the United States, easier.

• A “petrocurrency” tied to oil prices: Given Canada’s reliance on oil exports, the value of its currency often rises and falls in line with global oil prices.

• Modern and innovative money: Canada was among the first countries to switch to polymer banknotes, which are more durable, secure, and eco-friendly, and feature tactile elements for the visually impaired.

• Cultural symbol and distinctive design: The Canadian dollar is known as the “loonie” due to the common loon on the $1 coin, and its banknotes highlight key historical figures and national symbols, with a modern shift towards vertical design.

1. Canada once used playing cards as currency

While Canada’s earliest inhabitants traded resources like copper and beaver pelts, French settlers began using coins after Quebec was founded in 1608.

A shortage of money in 1685 led colonial authorities to issue playing cards as a temporary form of currency. These were used for transactions and could be redeemed for actual money when fresh supplies arrived. The first issue of this “card money” took place on 8 June 1685, followed by a second in February 1686. The public accepted the system, but the government soon rejected it as too easy to forge.

Despite concerns, a new issue was released in 1690, which eventually triggered inflation due to overuse. Authorities began phasing them out, and by 1771, this form of currency had lost all value.

Source: Bank of Canada

2. The colonial origin of the Canadian dollar

During the early days of colonisation, a wide variety of currencies circulated in Canada. Depending on the colony, these included pounds, francs, Portuguese coins, Spanish coins, Latin American money, and currency from Mexico, Peru, and Colombia.

Most colonies used the British system, which the UK attempted to impose after 1760. However, it was poorly suited to local trade practices.

In the 1850s, the first Canadian dollars were introduced. In 1858, it was adopted in several provinces, and after Confederation in 1867, the Canadian dollar gradually became the national currency.

Source: Bank of Canada

3. The Canadian dollar was modelled on the US dollar

As the United States was (and remains) Canada’s main trading partner, the Canadian dollar followed the US example. While the colonial pound was based on shillings and pence, a decimal system was adopted in 1858, dividing the dollar into 100 cents.

Several Canadian coins were introduced:

• 1 cent in bronze
• 5 cents in silver
• 10 cents in silver
• 20 cents in silver

The 20-cent coin was unpopular because it closely resembled the widely used US 25-cent coin. It was gradually phased out and replaced by a 25-cent Canadian coin starting in 1870.

4. A currency influenced by oil prices

Oil exports account for a significant portion of Canada’s economy. In 2014, they made up roughly 15% of total exports.

A Yale University study analysing the USD/CAD exchange rate found that it moves in tandem with oil prices. For instance, a 10% increase in oil prices could lead to a 3% rise in the Canadian dollar against the US dollar.

This connection has led to the Canadian dollar being known as a “petrocurrency”.

5. It’s called the “loonie”

The $1 CAD coin is one of Canada’s most recognisable symbols. The reverse features an image of a common loon floating on a lake. It’s from this bird, known as a “loon” in English, that the coin gets its nickname “loonie”, first used when the coin was introduced in 1987.

The loon image was created by wildlife artist Robert-Ralph Carmichael.

The $2 coin is nicknamed the “toonie”, a blend of “two” and “loonie”.

Source: Mint.ca

6. The notes are made of polymer

Canada was among the first countries to adopt polymer banknotes.

This material, commonly found in everyday products like clothing and food packaging, offers several advantages:

• Polymer notes are more secure and harder to counterfeit.
• They are more durable, lasting about 2.5 times longer than cotton-paper notes.
• Their extended lifespan makes them a more environmentally friendly option. They can also be recycled, reducing their ecological impact.

Source: Bank of Canada

7. One of the first countries to drop the $1 note

In 1989, Canada stopped printing $1 banknotes. This decision was based on several factors:

Paper notes are more fragile and expensive in the long run. While a $1 bill costs just 5¢ to print, it only lasts around nine months. The $1 coin, by contrast, costs 12¢ but lasts roughly 20 years.

$1 notes often jammed bus fare machines, so switching to coins helped solve this problem.

On 1 January 2021, a government decree officially withdrew the legal tender status of $1, $2, $25, $500, and $1,000 bills, all of which had not been printed for decades.

Source: Radio-Canada

8. Floating exchange rate

Originally, the Canadian dollar had a fixed exchange rate. But in the 1950s, this approach came under scrutiny. The Canadian dollar was depreciating, and a large inflow of foreign capital threatened to trigger inflation.

The government opted for a floating exchange rate, allowing the dollar’s value to be determined by supply and demand in currency markets.

Source: Bank of Canada

9. Notes designed for the visually impaired

Canadian banknotes include features specifically designed to help blind and visually impaired users identify denominations.

For example, the “Canadian Journey” series includes tactile markers in the upper right corner on the front of each note. These are not in braille but were developed in consultation with blind and partially sighted Canadians.

Colour choices and strong contrasts also make the notes easier to use.

In addition, the Bank of Canada provides a free handheld device to help visually impaired individuals identify banknotes.

Source: Numicanada.com

10. The design of Canadian banknotes

Several banknote series have been issued over the years, featuring a variety of portraits, landscapes, animals, and national symbols.

The current series, called “Frontiers”, was launched between 2011 and 2013.

• The $5 note, blue in colour, shows Sir Wilfrid Laurier, the first French-speaking Canadian Prime Minister. The back depicts Canadian space robotics.
• The $10 note is purple and features Sir John A. Macdonald, Canada’s first Prime Minister. The back shows the transcontinental railway.
• The $20 note is green, with Queen Elizabeth II on the front and the Vimy Memorial on the back, honouring Canadian soldiers of WWI.
• The $50 note is red, bearing the image of former Prime Minister William Lyon Mackenzie King. The back shows the icebreaker CCGS Amundsen.
• The $100 note is golden brown, featuring Sir Robert Borden, Prime Minister during WWI. The reverse includes medical imagery: an ECG, microscope, insulin bottle, and a researcher.

In 2018, a new vertically oriented $10 note was released. It features Viola Desmond, a Black Canadian civil rights activist, and on the reverse, the Canadian Museum for Human Rights.

Future notes are expected to follow the vertical design style introduced with the 2018 $10 note.

Source: Bank of Canada Museum