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Quebec Premier Pauline Marois speaks during a news conference in Lac-Megantic, Que., on Aug. 26, 2013.GRAHAM HUGHES/The Canadian Press

It's a coming war of words between Ottawa and the Quebec government that you can take to the bank.

Premier Pauline Marois's Parti Québécois government introduced a bill in the spring that would create an economic development bank for the province, offering loans and seed money for new businesses.

But the proposed legislation, still stuck in the national assembly, has stirred a linguistic tempest in the federal Finance Department because the new entity is to be called a "banque" – or "bank" in English.

Federal law forbids provinces or territories from calling development agencies or any other such institutions "banks," reserving that term for federal institutions and banks certified under the Bank Act.

The minority PQ government floated the plan last November, promising to consolidate existing investment and development activity into a "Banque de developpement economique du Quebec," introducing the enabling Bill 36 in April.

The troublesome word "banque," however, set off alarm bells in the federal Finance Department, which has since been gingerly tip-toeing through linguistic and political minefields – especially fraught now with a sovereigntist party ruling Quebec.

"There is a long-standing prohibition in the Bank Act on using the terms 'bank,' 'banker' or 'banking' and their equivalent in other languages," says one of several briefing notes on the issue for Finance Minister Jim Flaherty.

"The legislation prohibits any entity from using the term 'bank,' except for banks and affiliated entities created by a federal Act of Parliament ... and non-financial entities, e.g., The Toronto Daily Bread Food Bank."

Says another note: "Provincial financial services providers are not permitted to use the term."

Flaherty's advisers said Ottawa's banking czar – the superintendent of financial institutions – does have the power to grant some exemptions, but only to federally recognized banks that want to establish related entities.

"Contravention is a criminal offence that is punishable by either fine or imprisonment," the notes warn.

Heavily censored copies of the Flaherty briefing materials, dating from January to May this year, were obtained by The Canadian Press under the Access to Information Act.

A spokesman for Flaherty's department said the issue remains unresolved, but that Ottawa has contacted the Marois government about the matter.

"The Department of Finance is aware of the proposal and discussions have occurred with the provincial government," David Barnabe said in response to questions.

"No exemption from the Bank Act requirements has been granted by the superintendent of financial institutions."

A spokeswoman for Quebec Finance Minister Nicolas Marceau confirmed that federal officials have contacted the office about the prohibition.

But Melanie Malenfant says the Marois government is more focused on finding a way to pass Bill 36 in the minority assembly than on sorting out an acceptable name.

Provincial officials have previously questioned why Ottawa can create an equivalent agency – the Business Development Bank of Canada – using the word 'bank' while the provinces are forbidden to do so for their own regional-development funds or holding companies.

The Parti Québécois' proposed "Charter of Quebec Values," which would include a ban on religious headgear for public employees, also appears to be stoking tensions with the federal government.

Asked about the charter in Toronto last week, Prime Minister Stephen Harper said "we know that the separatist government in Quebec would love to pick fights with Ottawa."

"But that's not our business. Our business is the economy. Our business is job-creation for Canadians – all Canadians, including Quebeckers."

At the same time Harper said the federal government also has a responsibility to defend minorities. "Our job is social inclusion."

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