Until 1870, issuing bills in Canada was almost exclusively a function of private or chartered banks. Provincial and municipal governments in the 1830's to 1860's even issued notes for themselves.By 1866 the Government, hugely in debt, implemented government-issued bills in denominations of $1 to $1000. In 1871 the Government started to restrict the banks from issuing their own currency, by taking over $1 and $2 bills and permitting the bank to produce only larger denominations.
When the Bank of Canada finally came into being in 1935, the banks were given 10 years to reduce their issues to 25% of their paid-up capital. In 1944, the Bank Act removed completely the right to issues bills.
