tiff macklem : release of the financial system review opening statement by mr tiff macklem, governor of the bank of canada and ms carolyn rogers, senior deputy governor of the bank of canada, at the press conference following the release of the financial system review, ottawa, ontario, 18 may 2023. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss the bank of canada's financial system review ( fsr ). in addition to its price stability mandate, the bank plays a critical role in preserving and promoting the stability of the canadian financial system. financial system stability and price stability go hand in hand. price stability - confidence in the value of money - is the bedrock of a stable, well - functioning financial system. and financial stability is a precondition for price stability. the fsr is our annual assessment of risks that could test the resilience of canada's financial system and affect its important role of serving the economy. it is different from the monetary policy report ( mpr ), which provides our outlook - our forecast - for the canadian economy. the fsr is not a forecast. it does not provide what we view as the most likely outcome for the financial sector. rather, it examines the vulnerabilities and risks that could test the stability of canada's financial system and affect its ability to act as a shock absorber. and as carolyn will explain shortly, this year's fsr takes a slightly different approach from previous versions, with the aim of outlining areas of concern more clearly and concisely. over the past year, global financial conditions tightened in response to monetary policy actions aimed at reducing inflation. the forceful response by central banks, including here in canada, is proving successful at bringing inflation down. at the same time, we have seen periods of volatility and pockets of stress, particularly in the us banking sector. just as households, businesses and governments are adjusting to higher global interest rates, so must the financial sector. as this adjustment unfolds, participants in the financial system, regulators and central banks must all be vigilant. the recent banking stresses in the united states and switzerland are a reminder that risks can materialize and spread quickly. they highlight that the business models of some financial institutions rely too much on an environment of low interest rates and low market volatility. fortunately, authorities in those countries took swift actions to limit the spillover effects of these

mark carney : the virtue of productivity in a wicked world remarks by mr mark carney, governor of the bank of canada, to the ottawa economics association, ottawa, ontario, 24 march 2010. * * * it is either brave or foolhardy of the ottawa economics association to organize another conference around canada ’ s perennial challenges of demographics, productivity, and potential growth. the cognoscenti wearily deride these shortcomings even while they acknowledge their importance. 1 after all, who really wants to talk about getting old? similarly, the subject of productivity is described as too dull, or worse, too threatening for canadians. it is said to imply working harder, not smarter, or to promote job losses rather than income gains. these debates are thus thought best confined to the policy wonks, in order that our diagnoses and prescriptions can occur in a parallel, forgotten universe. however, one wonders, who would not want to be productive in their work? is there a child whom we do not want to reach his or her full potential? could what canadians expect of their economy be so very different from what they expect of themselves? our ambitions for the canadian economy should be bold. we are a country of immense strengths and, as demonstrated during the recent crisis, considerable resilience. yet canada does underperform. we are not as productive as we could be. our potential growth is slowing. moreover, this is occurring as the very nature of the global economy, in which we previously thrived, is under threat. this debate can no longer be avoided. what, then, must be done? there are two imperatives – one domestic, one international – to secure strong, sustainable, and balanced economic growth for canada. both recall aesop ’ s fable of the ant and the grasshopper, the moral of which can be best summed up as “ idleness brings want. ” in short, in a wicked world, canada needs productive virtue. canada ’ s slowing potential this conference has already benefited from comprehensive reviews of productivity and potential growth, so i would like to briefly summarize the bank ’ s views ( which are largely in accord with the emerging consensus ). we have a problem : demographic drag will increase in coming years. as the boomer generation ages, labour force participation rates will decline and hours worked will fall. the question is merely one of degree. for some age groups, there is a possibility that participation rates will be higher than currently