mark carney : bank note launch remarks by mr mark carney, governor of the bank of canada and chairman of the financial stability board, at the launch of the new 50 dollar bank note, quebec city, quebec, 26 march 2012. * * * hello and welcome. it is a pleasure to be here to announce the launch of the new 50 dollar bank note. this bank note features a symbol of canadian innovation and scientific excellence : the canadian coast guard icebreaker and research vessel, the amundsen. today is also a celebration of the 50th anniversary of the coast guard. so we find ourselves in an ideal location, in quebec, a city with a rich maritime heritage. icebreakers are an important part of the coast guard ’ s fleet, and it is entirely fitting to feature one on our currency. these new 50 dollar polymer bank notes, the second of our frontiers series, will become available in banks throughout the country as of today. this series of bank notes is called “ frontiers ” for two reasons. first, each bank note includes images that represent canada ’ s exploits and achievements, particularly those in the sciences, technology or exploration. the image on this note is an example of expanding the frontiers of knowledge and understanding of the arctic. the bank notes themselves have crossed a technological frontier. there is simply no other currency like it. these new notes feature a unique combination of transparent elements, holographic images, and other security features. they are the result of innovative technology and canadian ingenuity, including research by the bank of canada and excellent collaboration among physicists, chemists, engineers and other experts in the bank note industry. thanks to greatly enhanced security features and efforts undertaken by police forces, especially the surete du quebec and the rcmp, as well as the support of financial institutions and retailers, counterfeiting rates have been reduced by 90 per cent since 2004. issuing this new series of bank notes enables us to continue to stay ahead of counterfeiters. in addition to impressive security features to combat counterfeiting, these notes will last longer than those made from paper – at least two - and - a - half times longer – and will therefore be more economical and have a smaller environmental footprint. when they are eventually withdrawn from circulation, they will be recycled into other products here in canada. safer, cheaper, and greener : indeed, these new bank notes are a 21st century achievement of which all canadians should be proud and in which they can have full confidence. this

14 / 52 ; davis, s. ( 2011 ) : financial integration and international business cycle co - movement : the role of balance sheets, federal reserve bank of dallas, globalization and monetary policy institute, working paper no. 89. bernanke b. s., speech at the credit channel of monetary policy in the twenty - first century conference, federal reserve bank of atlanta, atlanta, georgia, june 15, 2007. bis central bankers ’ speeches potential explanation should be sought on the production side, which operates in conjunction with trade and finance. what is often left out of the euro area storyline is the fact that the monetary union came on top of diverging trends in total factor productivity ( tfp ) as the catching - up process in the eu came to a stall during the early 1990s 9. a reversal in the catching - up process came regardless of high investments in some peripheral countries and high capital output ratios – rather than a sign of success, high investments were an indication of deeper - rooted problems. 10 many peripheral countries did not need more investments per se to restart convergence – what they needed was a more efficient allocation of investments. the efficiency of investments fell victim to poor economic governance, rigid labour and product markets, low investments in information and communication technologies, defunct educational systems and the poor quality of corporate management. what the monetary union accomplished against such a background was to create an illusion of continuing convergence on the back of increasing foreign borrowing and investment in non - tradables, rather than to enact discipline in the economic governance of peripheral countries. the adoption of the single currency, followed by the consistent private sector interest spread, elimination of exchange rate risk and implied fiscal bail - out clause, cemented the duality in the quality of economic governance and boosted the suboptimal reallocation of resources in the periphery. so, we have observed financing low - productivity sectors ( via real estate or government spending ) with debt inflows, instead of capital flows fuelling further “ catching - up ”. this has produced asset bubbles and large exposures of banks from core euro area countries, as well as world - wide creditors, towards the euro area periphery, and created strong contagion channels that have increased the amplitude of swings in comparison to historical business cycles. such a phenomenon has in quite a few instances also been observed outside of the euro - area, regardless of the exchange rate regime implemented, which brings me to the discussion of challenges in finding an optimal policy mix in a small open