press, 2008 ). recent research at the bank of canada has empirically demonstrated that the financial channel plays a key role in the transmission of shocks originating from the united states. see k. beaton and b. desroches, “ financial spillovers across countries : the case of canada and the united states, ” bank of canada discussion paper no. 2011 – 1 ( 2011 ) ; and k. beaton, r. lalonde and s. snudden, “ the propagation of u. s. shocks to canada : understanding the role of real - financial linkages, ” bank of canada working paper no. 2010 – 40 ( 2010 ). bis central bankers ’ speeches if the recovery was speedier, despite weaker contributions from investment and exports, support for the recovery must have come from household and government spending. this was indeed the case. household spending declined by only 2 per cent between 2009 and 2010, compared with 6 per cent during the previous two recessions. the contribution of government spending to growth was more than one percentage point in each year. the greater strength of household and government spending reflects canada ’ s favourable position at the outset of the recession. major adjustments had been made to the structure of the canadian economy. business and household balance sheets were relatively sound, and the banking system was robust, managed prudently, and sufficiently capitalized. canada ’ s monetary policy framework had been effective and was credible. the fiscal situation was favourable, and the social safety net and regulatory framework were effective. as well, household spending was boosted by the prosperity arising from strong demand for our natural resources and by improved terms of trade. this favourable position gave canada the flexibility it needed to respond strongly to the crisis without compromising the credibility of our public policy frameworks. thanks to the expansionary monetary and fiscal measures adopted in concert with other g - 20 countries, canada was able to support domestic demand which contributed significantly to the economic recovery. important lingering issues in canada, then, we had room to manoeuvre to help us effectively absorb the aftershocks of the global economic crisis. it is essential to maintain this buffer in light of the elevated risks that still exist worldwide and the structural issues that persist in the canadian economy, even after the recession. the standard of living that we will be able to sustain in the medium term will depend, in fact, on our ability to address these issues. allow me to address three of these issues : household indebtedness, international competitive

of commercial banks to support businesses ’ shortterm credit needs, we launched a facility to buy bankers ’ acceptances. we also began purchasing commercial paper to provide funding for a wide range of companies and financial institutions. a repo — short for repurchase agreement — is basically a collateralized loan and, as such, provides f unding liquidity to financial institutions for a set term, backed by high - quality collateral. for more details on all of the bank ’ s actions in response to covid - 19, see the “ covid - 19 : actions to support the economy and financial system ” page on the bank ’ s website. - 4government of canada bond purchases as well, we began making large - scale purchases of goc bonds in the secondary market. we launched the government of canada bond purchase program ( gbpp ) at a weekly pace of at least $ 5 billion, across the spectrum of short - and longer - term bond maturities. as i ’ ll discuss in a few minutes, the focus of the program later pivoted from restoring market functioning to providing additional monetary policy stimulus while our policy interest rate is at its effective lower bound of 0. 25 percent. 5 provincial and corporate bond purchases also, in april, we announced we would be launching programs to thaw other important bond markets and support their functioning through purchases in the secondary market. we pledged to buy up to $ 50 billion of provincial bonds and up to $ 10 billion of highquality corporate bonds. the thinking behind our actions collectively, our actions and those that other major central banks took in their own jurisdictions helped to stabilize global financial conditions. the steps we took in canada to support core markets reflected our responsibility to act as lender of last resort when the financial system is short of liquidity and not working properly. this role goes back centuries. the original description of a central bank ’ s role as lender of last resort came in 1802 from henry thornton, an economist and leader in britain ’ s abolitionist movement. but it wasn ’ t until the late 1800s that british journalist walter bagehot created the better - known dictum that, in a crisis, a central bank should lend freely to sound institutions, against good collateral, and at penalty rates. 6 bagehot was referring to central banks lending to individual banks that faced a sudden funding squeeze, such as a run on their deposits. but in modern times, where financial markets have become another important source of funding, the lend