A. Introduction

• Author: M.H. Ogilvie
• Profession: LSM, B.A., LL.B., M.A., D.Phil., D.D., F.R.S.C. Of the Bars of Ontario and Nova Scotia Chancellor's Professor and Professor of Law, Carleton University
• Pages: 226-227

Page 226

A bank is first and foremost a deposit-taking institution. Without the deposit of funds, banks would never have come into existence and would not be able to continue to provide the numerous financial intermediation services they offer in society and to the economy. The Bank Act acknowledges this when it provides that banks may receive deposits from any person without the intervention of any other person.¹

As deposit-taking institutions, banks are reservoirs of society’s economic wealth as stated by Isaacs J. in the High Court of Australia: "[A bank] is, in effect, a financial reservoir receiving streams of currency in every direction, and from which there issues outflowing streams where and as required to sustain and fructify or assist commercial, industrial or other enterprises or adventures."²Foley v. Hill³framed the two main economic functions of banks and deposit-taking institutions in legal terms as a contract of loan between bank and customer, but those two economic functions, of borrowing money from customers and lending money to customers, remain at the economic heart and significance of banking in any society, whether the borrowing or lending transactions are performed on paper or elec-

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tronically. Without deposit taking, neither of these functions could be performed.

This chapter will discuss various aspects of deposit taking by banks, including the legal nature of a deposit, the various types of deposit, and the legal relationships among the various types of deposits that banks may take from a single customer. The next chapter will deal with transactions within deposits, that is, account...