Canada adopted a new system of currency in 1841 while a province of Britain. It set the new Canadian pound at a value of 4 USD. For the next decade, the people of Canada wrestled with British authorities over whether to adopt a sterling monetary system or, as the people wanted, to adopt a system based on the U.S. dollar. In 1853, as a matter of compromise, a gold standard was set up that was partly based on U.S. gold eagle coins and partly based on the British gold sovereign. Four years later, decimal coinage was introduced based on the value of the U.S. dollar. This officially aligned the Canadian currency system with that of the U.S., and the base currency became the Canadian dollar. After much debate between the Canadian provinces, some of which adopted their own currency system based on Spanish dollars, the Canadian currency system was standardized in 1871.
In the early 20th century, the gold standard in Canada was temporarily abandoned during the First World War and permanently abandoned in 1933. After floating for several years, the Canadian dollar was set at a fixed rate to the U.S. dollar until 1950 and then again from 1962 to 1970. Since 1970, it has floated on the international market.
Like Americans, Canadians also refer to their dollars as bucks, but Canadians ascribe this to the fact that a coin struck by early settlers was valued at the pelt of one male beaver, which was known as a buck. More recently, Canadians began to refer to their dollar as a loonie because the back of the one-dollar coin depicts a duck, or common loon.
Canadian coins are minted by the Royal Canadian Mint in denominations of 1 cent, 5 cents, 10 cents, 25 cents and 50 cents, although the 50-cent coin is rarely used. The first paper money under the new Canadian monetary system was printed in 1935 when the Bank of Canada was founded. At that time, notes included denominations of $1, $2, $5, $10, $20, $25, $50, $100, $500 and $1000. Today, only notes in the following denominations are printed: $5, $10, $20, $50, $100.
In the 1990s, the value of the Canadian dollar decreased dramatically, and inflation remained high until 2007 when it finally rebounded due to a strong economy and the falling strength of the U.S. dollar. Many central banks in Canada hold large reserves of Canadian dollars, and the Canadian dollar plays a central role in value of other currencies in North and South America. The Canadian dollar is the seventh most-traded currency worldwide.